Everything you need to know about the recent SEC crackdown on crypto
The Securities and Exchanges Commission (SEC) sued on Monday the biggest Crypto exchange in the world Binance and Its CEO Changpeng Zhao over different counts of infractions of securities laws, money laundering, and other financial crimes. The second day on Tuesday the SEC sued Coinbase the biggest U.S-based exchanges over the listing of unregistered securities. Right after those two news Coinbase shares fell more than 15% and Binance Native token BNB lost 28% of its value.
In the SEC lawsuit against Binance, the regulatory agency labeled these tokens as securities: Cosmos (ATOM), Binance Coin (BNB), Binance USD (BUSD), COTI (COTI)
Meanwhile, in the SEC lawsuit against Coinbase, these cryptos were named securities: Chiliz (CHZ), Near (NEAR), Flow (FLOW), Internet Computer (ICP), Voyager Token (VGX), Dash (DASH), Nexo (NEXO)
Finally, these tokens listed on both platforms, Binance and Coinbase, were also labeled securities: Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS)
Here is the total list of tokens deemed as securities by the SEC so far:
XRP (XRP), Telegram’s Gram (TON), LBRY Credits (LBC), OmiseGo (OMG), DASH (DASH), Algorand (ALGO), Naga (NGC), Monolith (TKN), IHT Real Estate (IHT), Power Ledger (POWR), Kromatica (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), XYO Network (XYO), Liechtenstein Cryptoasset Exchange (LCX), Kin (KIN), Salt Lending (SALT), Beaxy Token (BXY), DragonChain (DRGN), Tron (TRX), BitTorrent (BTT), Terra USD (UST), Luna (LUNA), Mirror Protocol (MIR), Mango (MNGO), Ducat (DUCAT), Locke (LOCKE), EthereumMax (EMAX), Hydro (HYDRO), BitConnect (BCC), Meta 1 Coin (META1), Filecoin (FIL), BNB (BNB), Binance USD (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS), COTI (COTI), Paragon (PRG), AirToken (AIR), Chiliz (CHZ), Flow (FLOW) Internet Computer (ICP), Near (NEAR), Voyager Token (VGX) and Nexo (NEXO).
What this means for the industry:
The latest lawsuits will play out in court, which could take years. An SEC suit alleging Ripple's XRP token is a security, for example, has been under litigation for more than two years. Whether the SEC wins or loses, the suits send a strong signal to the industry. While big crypto companies can afford to fight the SEC, smaller companies have filed for bankruptcy following SEC enforcement actions. This is what happened earlier this year with Library and it's token LBC when the judge ruled in favor of the SEC.
If this continues we will see less and less crypto innovation or startups coming from the U.S. as entrepreneurs are looking into more crypto friendly jurisdictions to build their projects. Coinbase had already announced their initiative to host an offshore crypto derivative exchange to escape SEC scrutiny. you can check out the article we wrote on the matter with the following link below: https://www.theanalyst.live/coinbase-moving-out-of-the-us/
Liquidity problems:
A crackdown on cryptocurrencies in the U.S. would undoubtedly impact trading volume and this is what happened. With fewer participants and restrictions on trading platforms, liquidity in the market would diminish. Also with the recent attack on the different ways to convert Fiat to crypto and vice versa, especially in the U.S. many firms and investors preferred unloading their positions on a massive loss. At the same time, it is still possible to cash in some of their investment before potentially becoming impossible.
Friday night one of the most illiquid times of the week the crypto market witnessed a huge sell off, with most coins going down more than 25% in a matter of minutes. Sending the total altcoins market cap below the early 2018 and late 2017 highs. Some coins are even trading below the Covid 19 market crash lows.
Protect Yourself:
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The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Always do your own research.
INVESTMENT RISKS:
There are risks associated with investing in securities. Investing in stocks, bonds, crypto, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible. Some high-risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods. A securities or a firm’s past investment performance is not a guarantee or predictor of future investment performance.