SeedCX Exchange Is Barring Employees from Crypto Trading

Having traded cryptocurrency with his own money since 2014, software engineer Alex Wachli made a difficult choice when he joined the institutional crypto startup Seed CX. He had to give up trading.

Seed CX forbids cryptocurrency trading by its roughly 40 employees.

Few exchange startups have employee trading policies comparable to those found in traditional capital markets, in part because crypto is still considered by some to be a Wild West industry without clear regulatory requirements.

In the securities markets, for example, an executive who trades stock knowing that the company is about to announce a merger or recall a defective product might be a straightforward case of illegal insider trading.

Sometimes the people working at crypto exchanges are privy to such information - including trading trends, technical issues related to liquidity, and decisions to list certain assets - before anyone else.

Woodford said his company's no-trading policy aims to foster trust among institutions that are used to established corporate norms beyond MNPI contracts, which state employees may not trade based on internal information that could move the broader market.

To put Seed CX's employee trading ban in perspective, CoinDesk reached out to several other prominent crypto trading platforms about their policies.

A spokesperson for Binance, currently the world's second-largest exchange by trading volume according to CoinMarketCap, said the Singapore-based company has "a strict policy in place banning insider trading, similar to that of investment banks," but would not share further details.

The company is fighting an ongoing class-action lawsuit alleging employees engaged in insider trading when the bitcoin network forked in 2017 to create the alternative currency bitcoin cash.

Wall Street veteran and AirSwap co-founder Michael Oved told CoinDesk that, in addition to MNPI restrictions, all employees require written approval from the legal team for trades over a certain amount, a value which Oved declined to specify.