If memecoins are considered commodities and not securities, then investors can’t sue for insider trading, says Bitwise Head of Alpha Strategies Jeff Park.
Insider Trading May Not Apply to Certain Memecoins, Says Bitwise Executive
Bitwise Head of Alpha Strategies Jeff Park on Monday said memecoin rug-pulls are not always illegal, while adding the caveat that it depends on the facts and circumstances of each individual case.
Park’s comments came in the wake of the LIBRA debacle which saw the token lose more than 90% of its value just 24 hours after launching. The resulting crash ended with more than $4 billion in market capitalization wiped out. Disgruntled investors accused Kelsier Ventures, one of the entities behind the launch, of insider trading and market manipulation. The team has confessed to netting a cool $100 million from the launch, further infuriating investors.
But Park hinted that Kelsier may escape unscathed. If memecoins are considered commodities and not securities, then investors can’t sue for insider trading. Instead, they must prove market manipulation, fraud, or both.
“Those charges generally require rigging prices or spreading false information to influence markets,” Park said. “It is often not enough to have passive information asymmetry.”
It appears that only a court of law can determine if Kelsier’s actions are tantamount to price rigging or providing false information to unsuspecting investors, but in Argentina, President Javier Milei who initially promoted the memecoin before retracting his support, faces accusations of fraud and threats of impeachment.
“Illegal is not always immoral, and immoral is not always illegal,” Park said. “But stupidity is legal,” he added.
