As DATs Proliferate, Expert Cautions That Crypto's Lack of Transparency Could Undermine Traditional Finance Stability

Digital Asset Treasuries Bring Crypto’s Old Problems to Traditional Finance

Shane Molidor, founder of Forgd, warns that persistent issues in the cryptocurrency sector—such as information imbalances and front-running—are now making their way into mainstream finance via digital asset treasuries (DATs). These DATs, which are companies holding cryptocurrencies as part of their corporate reserves, are inheriting the same weaknesses found in token markets. In these markets, prices often stray from their true value due to secretive trading and insider actions. Drawing on his experience at exchanges like Gemini and AscendEX, Molidor cautions that these problematic patterns are now embedded in institutional products, presenting fresh challenges for both investors and regulators.

From Major Coins to Riskier Tokens

Initially, DATs concentrated on well-established, highly liquid cryptocurrencies such as Bitcoin and Ethereum, where price discovery is generally more reliable. However, as competition has grown, many DATs have shifted their focus to smaller, less liquid tokens. This move has increased the risk of market manipulation. The trend mirrors strategies seen during token launches, where exchanges and market makers may intentionally underprice assets or restrict liquidity to drive up speculative interest. According to Molidor, even modest buying activity in these illiquid markets can cause dramatic price fluctuations, creating a self-reinforcing cycle—until liquidity disappears. “Many believe they’re buying at a fair price,” he notes, “but in reality, they’re purchasing at market peaks, which often leads to disappointing outcomes for users.”

Insider Advantages and Market Instability

The fundraising methods used by DATs further complicate matters. When reaching out to potential investors, insiders often gain early access to information about target tokens, enabling them to front-run the secondary market. Molidor points out that some DATs aim to generate enough market activity to push prices higher, sparking a fear of missing out among retail investors. However, this cycle is unstable: once buying slows, the same lack of liquidity that fueled gains can quickly lead to sharp declines. A notable example is ALT5 Sigma, a Nasdaq-listed fintech firm that adopted a DAT strategy with World Liberty Financial tokens. The company soon faced regulatory investigations, internal strife, and an 80% drop in its stock price, amid reports of staff concerns about legal risks and a money laundering conviction in Rwanda.

Echoes in Traditional Finance

Similar patterns are appearing in conventional markets. Recent insider sales at DoorDash and TransDigm Group demonstrate how prearranged trading plans, such as those under Rule 10b5-1, are increasingly used to capitalize on privileged information. (Source) While these trades are legal, they highlight how information advantages are being leveraged in both crypto and traditional finance. Molidor contrasts the speculative, momentum-driven strategies of many Asian exchanges with the more measured, auction-based listings on Western platforms like Coinbase. “Efficiency is important,” he says, “but it doesn’t appeal to retail investors chasing speculation.”

Regulatory Shifts and the Road Ahead

Regulators are beginning to address these challenges. The U.S. Securities and Exchange Commission plans to introduce clearer rules for digital asset trading and intermediary conduct in 2025, aiming to clarify crypto compliance. In the UK, the expanded Cryptoasset Reporting Framework (CARF) will require domestic transaction reporting from 2026, while Turkmenistan has legalized crypto under tight government oversight. These developments signal a global effort to bring digital assets into the regulated financial system, though Molidor believes that true collaboration between blockchain innovators and established institutions remains difficult to achieve.

Looking Forward: Bridging the Divide

The next stage of market development will reveal whether the industry can move past its speculative roots. “Investors are being exposed to assets they often don’t fully understand,” Molidor observes. If prices return to their fair value, the lack of transparency in DATs and token markets could result in substantial losses for investors. The key challenge, he concludes, is closing the gap between crypto’s technological advancements and the realities of financial markets. “Founders often lack experience with financial systems, while institutions struggle to grasp how crypto markets operate,” Molidor says.