The Cryptocurrency sector all over the world is currently facing revived uncertainty due to the recent action by the Securities and Exchange Commission (SEC) over assets that may be classified as securities.
Due to this recent happenings, prominent cryptocurrencies like Cardano (ADA), Solana (SOL), and Polygon (MATIC) have witnessed a significant decrease in their value, raising concerns about their long-term sustainability which they once offered.
Within the past 72hours, these three cryptocurrencies have experienced an average decline of 23% in their value. Moreover, they have collectively seen a capital outflow of $6.04 billion in just one day.
For instance, ADA is currently trading at $0.24, reflecting a daily loss of 23.62%. Over the course of the week, the decentralized finance (DeFi) token has witnessed a decline of more than 35%.
SEC’s onslaught on crypto
The drop in the assets’ price comes after the SEC unveiled two high-profile lawsuits against crypto exchanges Binance and Coinbase earlier as at last week. This lawsuits are also related to the fact that some of this crypto currency exchanges and securities are not registered.
According to the SEC, assets such as ADA, MATIC, and SOL, which are issued by foundations, companies, or tied to protocols, should be classified as securities in accordance with the regulator’s laws.
Other affected assets include Sandbox (SAND), Filecoin (FIL), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager (VGX), Dash (DASH) and Nexo (NEXO).
Obviously Crypto curency Companies fight back.
The foundations behind these three coins have dismissed the SEC’s claims. Solana Foundation, for example, has crossed out the thought that SOL is security, emphasizing that it is a (community-driven project) relying on decentralized engagement from users and developers.
Similarly, Cardano’s development company IOG has disputed the classification of ADA as a security.
Binance also expressed its disappointment with the SEC’s lawsuit in a recent blog post and highlighted its commitment to engaging in extensive good-faith discussions aimed at coming to agreement with SEC over this diluted issues.
It is worth noting that when confronted with regulatory action from the SEC, companies generally decide between pursuing a settlement or challenging the case in court.
If you can recall something like this happened in before when SEC filed a lawsuit against Ripple in December 2020, arguing that the sale of its XRP token constituted an unregistered securities offering. While the case is still ongoing we have seen the effect it has on the crypto currency Ripple and if something or an agreement does not happen soon such could be the case of Binance, Coinbase and some other exchanges.