SEC and FINRA Probe Crypto Treasury Stock Surges as Corporate Proxies Lag Behind Coins

Investigations Expand While Market Data Highlights ETF Pressure and PIPE Gravity

TL;DR

• SEC and FINRA are examining unusual trading patterns before corporate crypto treasury (DAT) announcements, with over 200 companies contacted.
• Corporate proxy stocks like Strategy, Metaplanet, and others have sharply underperformed compared to the crypto price index of BTC, ETH, SOL, and BNB.
• Analysts warn PIPE financings and potential ETF competition could pull many DAT equities back to issue prices or worse.

Regulatory scrutiny has intensified as the SEC and FINRA reportedly probe trading activity tied to corporate digital-asset treasury announcements, following sharp stock price spikes ahead of disclosures. More than 200 companies have been contacted since late September after market data revealed consistent patterns of large trades and abrupt rallies shortly before these firms revealed plans to raise billions for Bitcoin, Ethereum, Solana, and other holdings. Former SEC enforcement attorney David Chase noted that FINRA’s inquiry letters often mark the first step toward formal investigations, even if not every case advances. The timing of this action, coming alongside a more conciliatory public tone from regulators, underscores that enforcement against selective disclosure remains firmly in play.

The surge of digital-asset treasuries has been unprecedented in scale. Roughly 212 companies announced plans to raise close to $102 billion in 2025 to acquire crypto assets, often by gauging investor interest through confidential agreements. However, selective leaks appear to have slipped through these channels, fueling suspicion that insider trading or unfair practices drove early momentum in stock prices. These concerns reflect broader anxiety over market fairness just as the crypto price index shows new highs across major tokens.

Performance across corporate crypto proxies paints an even starker picture. Despite Bitcoin climbing more than 10% above its late-November 2024 high and reaching an all-time peak above $123,000 in August, Strategy shares remain 45% below their November top of $543. Japanese firm Metaplanet has lost nearly 78% since May despite Bitcoin being down only 2% from its $111,000 peak that month. 

Other proxy names have endured even deeper losses: SharpLink, tied to Ethereum, has collapsed 87% from a May high of $124 even as ETH has more than doubled, while Helius Medical Technologies is down more than 97% this year despite Solana only 33% off its January high of $295. CEA Industries, linked to Binance Coin, has slid 77% since its August peak over $34, even as BNB surged past $1,000 in September. Analysts warn that debt-financed treasuries could be forced to liquidate holdings into downturns, intensifying volatility and distorting the coin market cap of key assets.

The financing structure behind many of these companies has added to the pressure. PIPE deals—private investments in public equity—have fueled early surges but often drag share prices back toward issue levels once lockups expire. Kindly MD, trading under NAKA, briefly soared 18.5 times to nearly $35 before crashing 97% back near its $1.12 PIPE price. Strive Inc. is down 80% from May highs with further risk as its $1.35 PIPE supply unlocks, while Cantor Equity Partners, merging with Twenty One Capital, sits under $20 after falling 70% from peaks, still vulnerable given its $10 PIPE base. Analysts describe this as a gravity effect, pulling valuations back to initial financing levels regardless of broader market enthusiasm.

ETF competition looms as another threat to the DAT model. ETF expert Nate Geraci argued that the combination of spot ETF approvals, broad listing standards, and staking features could render many DAT structures obsolete, calling the dynamic “pretty much game over” for proxy equities. He advised investors to stick with ETFs or direct asset exposure rather than DAT firms like Strategy or Metaplanet. Bloomberg’s James Seyffart offered a counterpoint, stressing that ETFs never killed Strategy’s appeal and cannot replicate DeFi-based yield opportunities available to some treasuries, though he agreed that industry consolidation will inevitably cut down weaker entrants.

Industry leaders are bracing for that shift. Blockchain.com CEO Peter Smith, whose firm has invested more than $200 million across a dozen DAT issuers including ProCap Financial, BitMine Immersion, and Ton Strategy, stated that “capitalism is awesome” and predicted more DAT structures would emerge. Yet he also warned that consolidation is inevitable, as speculative shells and structure-driven plays are tested by market realities. His remarks highlight how quickly the landscape is shifting, where strong players may survive but weaker issuers are already being repriced back to their PIPE roots.

As crypto prices hold near record levels on the crypto price index, the divergence between coins and their publicly traded proxies illustrates the fragility of equity-based exposure. The mix of regulatory probes, PIPE gravity, and ETF competition has left investors facing an uncertain terrain where corporate treasuries no longer provide the same leveraged upside they once did, but now carry amplified risks when sentiment turns. This confluence of regulatory action and market data signals a defining period for the future of DAT-driven corporate strategies.

This article has been refined and enhanced by ChatGPT.