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SEC's Securities Labelling Shakes Crypto Market
The cryptocurrency marketplace was shaken when the U.S. Securities and Exchange Commission (SEC) branded certain digital currencies as securities. Algorand and Flow experienced a significant hit, reaching never-before-seen price depths on June 10 due to this announcement.
A Historic Drop Followed by a Slight Rebound
CoinGecko data shows that on June 10, Algorand (ALGO) and Flow (FLOW) touched their lowest recorded prices of $0.098 and $0.46, marking a decline of around 30% in just seven days.
However, these digital assets have shown signs of resilience, bouncing back slightly since hitting rock bottom. As of now, ALGO has seen a rise of over 12.5% and FLOW has clawed back just above 10.5% since June 10.
The Ripple Effect of the SEC Lawsuits
The SEC's lawsuits against popular crypto exchanges Binance and Coinbase, which resulted in the classification of 16 additional cryptocurrencies as securities, contributed to this downturn. Both FLOW and Internet Computer were amongst the digital currencies marked by the regulatory body.
Previously, the SEC had pointed out ALGO in its lawsuit against Binance, and it had initially singled out this cryptocurrency in its April lawsuit against Bittrex.
Over the past week, Internet Computer (ICP) has also experienced a downturn, slipping by about 25% and is now trading around $3.65 — just 25 cents away from its lowest recorded price of $3.40 from December 2022.
Defying the SEC's Securities Definition
The SEC's definition of securities has also ensnared Solana, Cardano, and Polygon. However, the creators of these three cryptocurrencies have firmly rejected this claim.
In response to the SEC's labelling, Polygon Labs emphasized through a June 10 tweet that Polygon was conceptualized and launched outside of the U.S. They stressed that MATIC had always been globally accessible, and no particular actions targeted the U.S. market.
On the same day, the Solana Foundation issued a public disagreement over the characterization of its digital token SOL as a security.
Meanwhile, Cardano's development company, Input Output Global (IOG), expressed their awareness of the SEC's categorization of ADA and identified what they termed as "numerous factual inaccuracies" by the regulator. Through a blog post, they stated categorically, "ADA is not a security under U.S. securities laws. It never has been."
