Crypto Bloodbath: $189M Liquidated as Insider Trading Case Collapses

Regulatory watchdogs just dropped insider trading charges like a hot potato—right as crypto markets got shredded.

The $189M Liquidation Tsunami

Leveraged positions got vaporized in twelve brutal hours. Longs and shorts alike got caught in the crossfire when volatility spiked—proving once again that crypto moves faster than regulators can draft memos.

Legal Wrangles Meet Market Mayhem

While traders watched portfolios bleed, courtroom dramas fizzled. The dismissed allegations highlight how enforcement struggles to keep pace with decentralized markets—where the only insider information might be who's holding the biggest bag.

Another day, another nine-figure lesson in why you shouldn't trade with margin unless you enjoy donating to the crypto casino.

The price action, per several market watchers on X, is “unusually volatile and unsustainable,” after liquidity thinned over the weekend due to an unexpected surge in Leveraged trading. 

The largest crypto by market cap extended its climb to $111,121 on Monday’s early Asian trading sessions, while Binance futures premium crossed the $114,000 level.

Whale reloads shorts, gets ‘rekt’ by subtle market rally

The “Trump insider” crypto whale, a pseudonymous trader who gained notoriety after reportedly earning $160 million from shorting Bitcoin just before Donald Trump’s tariff announcement triggered a market-wide sell-off, is back to betting that a price slump will hit the market.

Onchain data from analytics platform Hyperscan showed the trader deposited $30 million in USDC to Hyperliquid before opening a $76 million Bitcoin short position with 10x leverage. The trade, sized at 700 BTC and entered at $109,133 per coin, carries a liquidation price of $150,080.

One crypto account on X, going by the username Going Deeper, noted that the same address had opened several similar positions after bitcoin briefly recovered from last weekend’s drop. Transactions tracker Lookonchain also confirmed the same trader added 3,440 BTC in shorts, valued at $392.6 million, and was sitting on $5.7 million in unrealized profit at the time.

The "insider" whale is toast.

🐋 has been harpooned and bleeding.

FIY: he's no insider dickheads. #Bitcoin #btc $btc $crypto pic.twitter.com/GrL3I3TdH6

The timing of the “Trump insider’s” trades, particularly his profitable short ahead of Trump’s tariff announcement, has caused some market participants to speculate that the trades could have been made using privileged information about the policy decision.

However, legal commentators say the case for insider trading would be difficult to make. Under US law, insider trading charges require that the traded asset be classified as a security, which Bitcoin and Ethereum are not. Both are recognized as commodities under the Commodity Exchange Act and therefore fall outside the SEC’s Rule 10b-5 jurisdiction under the Securities Exchange Act of 1934.

“Insider trading requires a fiduciary duty between the insider and whoever trades on the information,” a former SEC official explained. “Unless you can tie the traders to someone within the administration who had such a duty, it WOULD be tough to make a case.”

The official added that proving such a connection would be difficult because government officials do not hold the same fiduciary duties as executives of private corporations. Even if the trader had advance knowledge of a policy move, it would be nearly impossible to prosecute under existing insider trading laws.

Whales join the ‘short side’

Retail traders may be rushing to close their shorts to avoid getting rekt by the recent price rebound, but several whales have continued to add bearish positions. Lookonchain reported that two addresses, 0x8c58 and 0x939f, have opened new high-leverage short positions on Bitcoin, Ethereum, Solana, and XRP on Hyperliquid.

Whales still seem bearish — adding more shorts.

0x8c58 deposited 5.38M $USDC to #Hyperliquid 2 hours ago to open a 20x short on 1,500 $ETH($6.06M).

0x939f deposited 4.5M $USDC to #Hyperliquid over the past 20 hours, continuing his $BTC short position to 394 $BTC($43.7M).
He… pic.twitter.com/wLY6lKzQYf

The first address deposited $5.38 million in USDC to open a 20x leveraged short on 1,500 ETH, valued at roughly $6.06 million. The trade, entered at around $4,063 per ETH, is still active with a $39,978.12 realized profit.

The second address has made even larger moves over the past 20 hours, depositing $4.5 million in USDC to open a 40x cross-margin short on 394 BTC, valued at $43.7 million. The trader also shorted Solana, XRP, and Ethereum in parallel trades worth millions.

Onchain data showed that the solana short, worth $11.38 million, was entered at $196.95, while the XRP short targeted 1.3 million tokens at $2.57 each. The trader’s Ethereum short, worth $2.63 million, was placed at $4,060. All of the trades bar Bitcoin have so far recorded positives, and the account is currently valued at $13,842,195, per Hyperscan data.

If you're reading this, you’re already ahead. Stay there with our newsletter.