- The SEC has gone to war with the cryptocurrencies industry.
- It filed lawsuits against Coinbase and Binance this week.
- Bitcoin and most altcoins have all plunged as investors dumped the tokens.
IOTA price crashed for the second straight day after the Securities and Exchange Commission (SEC) went to war with cryptocurrencies. The coin plunged for the second straight day and is hovering near the lowest level since May 22 after. Other popular cryptocurrencies like The Sandbox, Pepe, Sui, and Decentraland also plunged by double-digits.
SEC sues Binance and Coinbase
The SEC has been criticised sharply in the past few months after the collapse of FTX, Celsius, Voyager Digital, and Terrra.
Now, it seems like the agency has decided to go to war with companies in the crypto industry. On Monday, the agency unveiled a major lawsuit against Binance, the biggest company in the industry. It also sued its CEO, Changpeng Zhao.
The lawsuit was wide and as it accused the company of misusing customer funds, offering services to the United States without following the law, and offering an unregulated exchange. Binance has rejected these claims and vowed to defend itself.
And on Tuesday, the SEC filed another lawsuit against Coinbase, the biggest crypto exchange in the world. This lawsuit is about staking products that the company provides. In a statement, the SEC said that Coinbase should be stopped from offering these products since they violate the law.
For starters, staking is a service that gives investors or crypto holders the ability to earn a return by helping to secure the network. It is offered by the biggest exchanges in the world, including Binance and OKX.
At the same time, staking is also offered by decentralized staking companies like Lido which are hard to regulate.
Cryptocurrencies plunge
A quick look at the crypto industry shows that most coins and tokens are plunging. Bitcoin dropped to $25,500 while Ethereum is still stuck above $1,800.
The worst-performing coins in the industry are The Sandbox, Sui, Decentraland, Conflux, and IOTA. All these coins plunged by more than 10% in the past 24 hours.
A common question among traders is whether these altcoins will bounce back again this year amid the ongoing regulatory scrutiny. In my view, I believe that they will bounce back as we have seen when other black swan events happened.
For example, most cryptocurrencies are now much higher than where they were when FTX collapsed in November. Similarly, metrics have been supportive after the collapse of Terra and its ecosystem in 2022.
Further, these lawsuits will likely remove the regulatory risks that have clouded the market in the past few years.