Input Output, the research and development firm behind Cardano, responds to SEC’s claims that ADA is an unregistered security. What happens next?
The cryptocurrency ADA, which powers the Cardano blockchain, has had a difficult few days. It dropped almost 7% on Friday, hitting $0.30 per token, and its losses for the week now stand at over 20%, marking its worst week in more than two years. Some technicians believe that this sharp decline, which has seen ADA lose its grip on its 200-Day Moving Average, could be the start of a larger move back towards late-2022 lows in the $0.24 area.
The catalyst for this week’s sharp decline was a double whammy of lawsuits by the US Securities and Exchange Commission (SEC) versus Binance and Coinbase. Both cryptocurrencies stand accused of operating as unregistered securities exchanges in the US and one of the securities that they allegedly offered to the US public is ADA. In other words, the SEC is claiming that ADA is a security, and is pushing to have it regulated as such in the US. If ADA is legally viewed as a security, only licensed securities dealers will be able to offer the asset to investors in the US. Cryptocurrency exchanges that wanted to continue offering ADA would be forced to go through a hugely expensive compliance process in order to list to token in the US.
Input Output Hong Kong (IOHK), the research and development company behind the development of the Cardano blockchain, issued a defiant statement in response to the SEC’s labelling of ADA as a security. The CEO of the Cardano Foundation, a non-profit tasked with supporting the growth of the Cardano ecosystem, also issued a statement outlining his disagreement with the SEC’s recent classification.
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