Cardano, Solana, and Algorand hit new lows in securities designation.
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Binance and Coinbase, causing significant volatility in the cryptocurrency market. As part of this legal action, the regulator has identified 19 new cryptocurrencies as securities. The SEC claims that “Coinbase makes these crypto assets available for trading without restricting transactions to those who might treat the asset as anything other than as an investment.”
Market Turmoil as Securities Designation Takes Effect
After this classification, several digital assets experienced a sharp drop in value, hitting their lowest prices to date. These assets include Cardano (ADA), Solana (SOL), Algorand (ALGO), Polygon (MATIC), and Filecoin (FIL), among others. According to CoinGecko data, ADA and SOL saw a significant drop in value, with each token losing 20% and 18%, respectively. ALGO, MATIC, FIL, FLOW, BNB, SUI, and ARB also saw a dip in their prices as investors grappled with the implications of potential regulatory restrictions. Within days of the lawsuit, crypto traders had lost over $320 million in liquidations, according to data from CoinGlass. Meanwhile, trading app Robinhood announced it would cease its support for some of the crypto assets from June 27.
Development Companies Defend Token Status
While the SEC’s classification of these cryptocurrencies as securities has shaken the market, the development companies behind these assets have strongly rejected the regulator’s characterization. Input Output Global, the company behind Cardano, refuted the SEC’s allegations, stating that “Under no circumstances is ADA security under US securities laws. It never has been.” Similarly, the Solana Foundation disputed the characterization of SOL as security and stressed its commitment to working with regulators in pursuit of regulatory clarity within the nation. Polygon Labs also noted that its actions had never specifically targeted the US, pointing to its global community in the process.
Following these clarifications, ADA, SOL, and MATIC all made a partial comeback, recovering some of the losses incurred in the past week. ALGO and FLOW also recovered over 12.5% and 10.5%, respectively, bringing relief to their holders. Bitcoin has also experienced an uptick in demand, asserting its market dominance as the altcoins struggle.
