DOJ Official Warns of Increased Short-Selling Activity

According to a report, the head of the DOJ’s market integrity team made significant remarks about short selling. In recent months, regional bank stocks in the United States have experienced a massive decline.

However, three mid-sized U.S. banks failed within five days in March 2023, precipitating a sharp decline in the share prices of global banks.

According to Justice Department official Avi Perry, short selling, including through options, is a primary concern for prosecutors.

He warned the market that increased short-seller activity was imminent. However, he implied that actions against officials manipulating the market with corporate trading plans would be taken.

Since 2021, the U.S. Securities and Exchange Commission (SEC) and Department of Justice (DOJ) have conducted extensive investigations into manipulation by short sellers, including hedge funds, according to the report.

John Deaton, the attorney for XRP holders in the U.S. SEC vs. Ripple case, commented on the regulator’s decision to go after short sellers.

He stated that Ripple’s legal battle with the commission demonstrates the nonexistence of free-market capitalism. The attorney emphasized the SEC’s inability to provide precise market regulations.

The SEC has been unable to prove its multiple claims against Ripple. The commission changed its claims regarding the infamous Hinman’s Ethereum speech and related documents regularly.

A few unelected regulators determine the market’s winners and losers, according to XRP Lawyer.

JPMorgan Chase can place a short bet against anyone, but short sellers cannot target it. If traders attempt to short large banks, regulators will alter the rules.