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SEC Settles Insider Trading Suit With Son of California Bank Board Member

The Securities and Exchange Commission continues to crack down on illicit activity within the cryptocurrency industry. It is easier said than done, as a lot of dubious-looking projects exist today. Aaron Smith of San Francisco was recently charged with insider trading. That wouldn’t be entirely unusual, were it not for the fact that Smith is the son of a California bank board member.

Aaron R. Smith Is in the Hot Seat

According to new information shared by the SEC, they had charged a California bank board member’s son with insider trading. Aaron R. Smith, son of a director at Valley Commerce Bancorp, had used material nonpublic information to conduct stock trades. This information pertained to a north Californian bank being acquired by another local bank in a non-public manner.

Smith learned about the impending deal from his father. With this knowledge, Smith Jr. decided to use a large portion of his personal savings to open a brokerage account. With that account, he began trading Valley Commerce Bancorp stock. Once the acquisition was made public, the Bancorp stock price soared by 37%.

For Smith, this netted him close to $41,000 in profit. He still has not admitted or denied these charges, yet Smith agreed to settle with the SEC and put this matter to bed once and for all. He will cease and desist from further violations of federal antifraud provisions and pay a fee of $43,783.35. An additional penalty of $40,578.28 will be paid as well.

It is not the first time insider trading has affected the financial industry. It is a very common activity, mainly because informed sources tend to share information, either willingly or by accident. It is not unique to traditional finance either, as the cryptocurrency industry has witnessed insider trading incidents as well. This mainly pertains to exchanges listing new coins and some speculators reaping the early rewards.

It is important for family members to never divulge such information. A slip of the tongue can occur at any time, but it can have massive consequences for the industry as a whole. Smith will avoid jail time as a result of settling. It is unclear why he decided not to admit to these charges, since the evidence clearly outlines what happened behind the scenes in this case.

For the SEC, it is another small victory toward creating a safer and more robust financial ecosystem. All of these developments are designed to make both consumers and corporations feel safe and secure. Rest assured this will not be the final incident involving insider trading, either within or without the cryptocurrency industry.

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At press time, the father of cryptocurrency is trading for just over $6,000. This is about $200 less than where it stood during yesterday’s afternoon hours. The coin is continuing to fall deeper and deeper into red territory, though this price is an improvement over where it stood during the early morning, when it fell below $6,000. The currency is now just a few steps above its lowest point of the year, which it hit on June 18 with a price of just over $5,770. The cryptocurrency market cap has shed approximately $21 billion off its back in the last 24 hours, and it appears the crypto space is being targeted by massive sell-offs. In other words, bitcoin is not alone in its present state. The currency is struggling to maintain its position on the financial ladder, yet it’s still doing relatively well in comparison with entities like Ethereum, which has fallen below the $300 mark – the lowest it’s been all year. Also, Ripple – the third-largest cryptocurrency by market cap – has also fallen by roughly 14 percent. Charles Hayter, CEO of CryptoCompare, is blaming the SEC’s decision to postpone any action towards the bitcoin ETF submitted by VanEck SolidX. “This has snowballed negative investor sentiment,” he explains. Some, however, are refusing to give in to all the hype and say that bitcoin still has the power to unite cryptocurrencies across the board. One Reddit user for example, recently posted his thoughts regarding the recent sell-off. “Am I selling now?” he asks defiantly. “No way. Why not? Because bitcoin is not broken. Nothing bad happened to bitcoin. It still works. Will there be bumps along the way? What do you think we’re experiencing now? Some of [you]get to decide: are you going to be a coward or not?” Hayter further commented that the bitcoin arena is only going through ups and downs because it is still a developing market; that it holds a strong position in the financial infrastructure, but needs more time to mature: “Bitcoin and its ilk are opening up a new arena of finance. The hope and speculation that gripped the market last year has been eroded in the last few months. That said, under the hood, a lot of work has been moving ahead to form the routes to incumbent institutions and to provide them with the tools, mechanisms and assurance they need for entering the cryptocurrency space. It’s only a matter of time before the crypto sphere becomes part of the mainstream, but it needs to do a lot of growing up in the process.” Bitcoin Charts by TradingView

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