After a dramatic drop overnight, bitcoin prices stabilized on Tuesday. Still, they remained near their lowest in over two months as investors digested news that the U.S. securities regulator sued crypto exchange Binance, a major blow to the industry.
Bitcoin, the largest cryptocurrency, fell 0.01% to $25,736, reaching a two-month low on Tuesday. It fell more than 5% the day before, the biggest drop since April 19.
On Monday, the U.S. Securities and Exchange Commission sued Binance, the world’s largest cryptocurrency exchange, and its CEO Changpeng Zhao, alleging that Zhao secretly controlled Binance.US as part of a “web of deception” to circumvent U.S. regulations.
“It’s another blow to the crypto industry and crypto exchanges of the world,” said IG Markets market analyst Tony Sycamore.
“If what (the SEC is) alleging is accurate… well, Binance is the biggest, and if this is going on at the biggest, what’s occurring at the smallest? Natural connection. Investors aren’t confident.” After Monday’s 9.2% drop, Binance’s coin plummeted 0.28% to $276.87, a near three-month low.
According to Reuters, despite claiming independence, Binance controlled its U.S. affiliate’s bank accounts.
Binance said it had “worked hard to answer their questions and address their concerns” and tried to resolve with the SEC.
Binance’s SEC complaint is the newest legal issue. IN MARCH, the CFTC sued the company for operating an “illegal” exchange and a “sham” compliance program.
Zhao called the CFTC charges “incomplete recitation of facts.”
According to CoinMarketCap, on Tuesday, Binance’s 24-hour trading volume increased to $12.48 billion in Asia.
“If the SEC is successful in deeming stablecoin BUSD, Cardano’s ADA, Solana’s SOL, and Polygon’s Matic are securities, that could kill retail interest for an important part of the cryptoverse,” said Oanda senior market analyst Ed Moya.
“Everyone is waiting on how crypto will get regulated in the U.S. If too many key cryptos are deemed securities, that could mean they could get liquidated and the money might just go back into Bitcoin.”
Following FTX’s collapse last year, the SEC’s crypto sector persecution continues with Binance’s lawsuit. However, due to increased scrutiny, crypto enterprises are increasing compliance, product offerings, and international expansion.
“This case is significant, and the crypto and fintech industries should pay close attention to its impact,” said Wayne Huang, co-founder, and CEO of XREX Inc., a blockchain-enabled financial institution operating the XREX USD-crypto exchange.
