On February 26, onchain investigator ZachXBT is expected to release an important investigation regarding insider trading at a crypto company.
ZachXBT revealed information about an upcoming analysis on February 23, teasing research into one of crypto's most profitable businesses. It seems that multiple of the project's employees abused internal data for insider trading over a prolonged period of time.
His announcement triggered market volatilty, speculation in the industry, and gained over 10.5 million views with his X announcement.
Polymarket bets on ZachXBT's investigation triggered market volatilty
ZachXBT's February 23 announcement prompted bets on Polymarket about the potential crypto project analyzed by the blockchain investigator, with names such as PumpFun, Meteora, MEXC, World Liberty Financial, and Axiom mentioned as potential candidates.
Traders made profits speculating on Polymarket, and on February 26, Lookonchain revealed how someone had gained $39,000 in a single day betting that Axion would be accused of insider trading.
On February 23, the market recorded a decline after his announcement. BTC saw volatilty, while PUMP, MET, WLFI, and other tokens recorded price drops.
These moves show that the announcement itself and Polymarket traders' bets created volatility in the crypto market, leading to a cascade of price drops for multiple projects, whether they were targeted by the prediction market platform or not.
The importance of clear market regulation
ZachXBT's analysis follows another recent industry disclosure about Jane Street, which has reportedly contributed to the Terra/Luna 2022 collapse.
These latest investigations come as the US is preparing to codify into law the CLARITY Act, which aims to:
- Set clear market oversight rules for SEC and CFTC regulators
- Make manipulation explicitly illegal in crypto markets
- Remove loopholes that could be exploited by manipulators
- Classify practices like wash trading, spoofing, fake volumes, and insider trading as federal offenses
- Implement market surveillance standards in exchanges with clear KYC, custody rules, PoR, and others
- Crack down on insider abuse
- Protect investors
- Foster innovation in an industry free of manipulation and exploitative practices
The CLARITY Act is expected to become law in the US in the next few months.
Implementing clear rules for the industry is important for maintaining trust in the ecosystem and promoting a healthy, risk-free environment for participants.
This week, the US President Donald Trump called on Congress to pass the Stop Insider Trading Act to protect the markets and ensure that all Americans can profit from a rising stock market.
However, it's important to mention that market manipulation comes not only from exchanges or insider trading, but from platforms that can influence trust in the Web3 industry as well.
