SEC’s Crackdown on Crypto Exchanges
In a sudden turn of events, the U.S. Securities and Exchange Commission (SEC) escalated its regulatory scrutiny of the cryptocurrency industry by filing lawsuits against two major cryptocurrency platforms, Binance and Coinbase. The SEC’s recent move could potentially reshape the crypto market, which has largely operated outside of regulation, by extending its jurisdiction over the industry.
Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao, were accused of operating a “web of deception”. The SEC’s complaint against Binance included allegations of inflating trading volumes, improper commingling of assets, and misleading customers about its controls. Following the lawsuit, customers withdrew roughly $790 million from Binance and its U.S. affiliate.
Coinbase in the Crosshairs
Coinbase, another cryptocurrency giant, was sued by the SEC for allegedly operating as an unregistered securities exchange. The SEC claimed that Coinbase traded at least 13 crypto assets, including Solana, Cardano, and Polygon, that should have been registered as securities. As a result of the lawsuit, Coinbase faced net customer outflows of about $1.28 billion. Despite the legal challenge, Paul Grewal, Coinbase’s general counsel, stated that the company would continue its operations and uphold its commitment to compliance.
CryptoMeter Trend Indicator Reflects Bearish Market
Adding to the grim market outlook, the CryptoMeter Trend indicator nosedived below 13, marking an all-time low bearish score. The drastic fall in the indicator’s score is a reflection of the volatile market condition where numerous coins witnessed a sharp drop of 15-30% within just a few minutes. The rapid decline in the value of these coins further amplifies the instability and uncertainty currently prevalent in the crypto market.
Impact on Cryptocurrency Prices
The news of the SEC crackdown resulted in a tumultuous week for cryptocurrencies and related stocks. Bitcoin, the leading cryptocurrency, initially fell to a near three-month low of $25,350.
The fallout was more severe for smaller tokens, which plummeted to new lows. Ethereum, the second-most popular cryptocurrency, sank 5.7% to $1,735. Cardano tumbled 17% to 25.43 cents, hitting a 52-week low of 22.95 cents. Dogecoin, frequently championed by Tesla CEO Elon Musk, slid 12% to 6.06 cents.
