ADA price drops on Binance lawsuit; is Cardano a security?
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance and its CEO, Changpeng Zhao, which has contributed to a decline in prices across the cryptocurrency market, including Cardano (ADA).
At the time of writing, Cardano (ADA) is trading at $0.35, experiencing a 6% loss in the last 24 hours. In the last week, the cryptocurrency has recorded a 7% decrease and is among the worst performers in the top 10 by market capitalization, only surpassed by Binance Coin (BNB).
SEC Fight Against Binance Splashes Cardano (ADA)
The U.S. regulator has filed a complaint in the District of Columbia, claiming that Binance has been offering “unregistered securities” since its inception. These alleged securities under U.S. laws include Cardano (ADA), Polygon (MATIC), Solana (SOL), Filecoin (FIL), Cosmos Hub (ATOM), Algorand (ALGO), and others.
- BTC price drops due to US SEC legal action against Binance and its founder.
- Top 12 utility tokens provide added value for investors beyond just cute memes.
- SEC sues Binance for violating U.S. securities laws.
The SEC classifies ADA as a “crypto security,” a term coined in the last two years. The regulator provides an overview of the token’s history, claiming the following and potentially arguing against ADA’s decentralization:
Today, three entities are responsible for Cardano: (1) the Cardano Foundation, a Swiss entity that is the legal custodian of the Cardano protocol and owner of its brand; (2) IOHK, an engineering company controlled by Hoskinson and Wood responsible for designing, building and maintaining the Cardano blockchain; and (3) Emurgo (…).
The SEC claims that these entities hold over 16.7% of ADA’s total supply or 31.1 billion ADA. The regulator also claims that the companies sold the token to fund development, marketing, business operations, and other critical project areas.
As of this writing, there is no official reply from these entities or IOHK (IOG), the company behind Cardano’s development.
Crypto Market Participating Over-reacting To Binance Lawsuit?
Despite the lawsuit, some members of the crypto community call the event a “nothing burger.” The U.S. regulator has yet to provide a clear legal framework for what constitutes a security in this country. In that sense, legal expert Collins Belton believes that today’s bad news could turn into a positive development for the long haul.
The expert stated via his Twitter account:
(…) this should actually be seen as a bit of a tension reliever for anyone that hasn’t been wildly deluded on Hopium. This complaint has been hanging above us like a sword of Damocles and letting it fall now in the depths of a bear is probably the best we could hope for.
Belton also believes the crypto market could be “overstating” the complaint. The lawsuit could finally release tension from key actors in the sector in the future, but in the short term, “not much change from status quo,” the expert concluded.
Chart from Tradingview
