On Monday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO, Changpeng Zhao. The lawsuit alleges that Binance operated an unregistered exchange and redirected investors’ funds to a trading entity controlled by Zhao.
According to the lawsuit, Binance sought to avoid regulatory oversight intended to safeguard investors and the overall market. The lawsuit was filed in federal court in Washington, D.C.
In the lawsuit, the SEC stated that 10 additional tokens were deemed to be in violation of securities law. According to federal court documents, the SEC classified SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI as securities. These ten tokens, along with others, were referred to as “crypto asset securities” in the SEC’s complaint.
The lawsuit was a big blow to the prices of cryptocurrencies, including Bitcoin and other altcoins.
Bitcoin’s price experienced a recent decrease to approximately $25,445, representing a nearly 4% decline within the past 24 hours. A significant portion of this decline took place within the two hours following the Securities and Exchange Commission’s (SEC) lawsuit against Binance.
Throughout the previous week, BTC had been trading above $27,000. However, the allegations directed at Binance reignited concerns regarding the integrity of the industry and the regulatory authorities intentions to exercise greater control over exchanges.
Following the lawsuit, there has been a heightened liquidation and exchange outflow. This also triggered a massive sell-off causing the prices to take a hit. Recent data also shows that major exchanges are seeing short positions as traders anticipate a crash.
The lawsuit, the increased sell-off, the exchange outflow, and the statement by the SEC accusing other cryptocurrencies of being securities also created fear and uncertainty in the market. The global crypto market cap has also plummeted by 3.57% in the last 24 hours.
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