Major cryptocurrencies dropped on Monday evening after news broke that the Securities and Exchange Commission (SEC) had filed charges against Binance, one of the largest cryptocurrency exchanges, and its founder Changpeng Zhao for alleged securities violations.
| Cryptocurrency | Gains +/- | Price (Recorded 9:30 p.m. EST) |
| Bitcoin BTC/USD | -5.21% | $25,647 |
| Ethereum ETH/USD | -4.17% | $1,806 |
| Dogecoin DOGE/USD | -8.22% | $0.066 |
What Happened: Bitcoin, the leading cryptocurrency by market capitalization, recently suffered a sharp downturn below $26,000.
Despite having stabilized above $27,000 for the past week, the allegations against Binance reignited concerns about the industry’s credibility and regulatory oversight of cryptocurrency exchanges. Binance and other exchanges have been under increased regulatory scrutiny for several years now.
Similar to Bitcoin, Ethereum and other major altcoins also experienced a decline on Monday, with most of the drops occurring in the immediate aftermath of the SEC lawsuit.
In a Monday tweet, SEC Chair Gary Gensler said that Zhao and Binance entities engaged in "an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law."
In response, Zhao tweeted: "Wonder if he ever reads the comments under his post, from the consumers he is [supposed] to protect."
Top Gainer (24 Hour)
| Cryptocurrency | Gains +/- | Price (Recorded 9:30 p.m. EST) |
| KAVA | +6.32% | $1.06 |
At the time of writing, the global crypto market capitalization stood at $1.09 trillion, a decrease of 4.91% over the last day.
On Monday, the S&P 500 index recovered some ground but ultimately finished lower, wiping out earlier gains that brought it to its highest level in nine months. The benchmark index declined by 0.2%, while the Nasdaq Composite dipped 0.09%. Among the losers was Apple Inc AAPL, which fell about 0.8% and retreated from its all-time highs earlier in the session. Apple announced its much-anticipated virtual reality headset and various software updates during its annual Worldwide Developers Conference.
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Analyst Notes: "Everything changed after reports that the SEC sues Binance and CEO CZ. 13 charges against the exchange and it seems the regulatory hammer might be poised to deemed a lot of cryptos as unregistered securities. Earlier Binance announced that Richard Teng, Binance's head of regional markets outside the US is expected to be CZ's heir apparent," said Edward Moya, Senior Market Analyst at OANDA.
Moya added, "Teng is a regulator and that should serve well helping deal with the upcoming negotiations with US regulators. The cryptoverse can't afford to lose another major exchange and Binance's success is vital for Bitcoin not collapsing even further."
According to crypto analyst Michaël van de Poppe, the total market capitalization for crypto is revealing some important trends. The market is presently undergoing a significant test of the 200-Week MA and EMA, which is poised to determine the market’s outlook. If the market can hold this critical level, it’s highly likely that the current correction will come to a close. However, if there’s a loss in momentum and the market is unable to sustain above the moving averages, there is a possibility of prolonged bearish sentiment.
On-chain analytics company Santiment said the news of Binance being targeted by the SEC resulted in the third worst market performance of the year, with only March 8 and April 17 being worse. The extent of the impact on the market remains uncertain, with potential recovery largely hinting at the severity of the situation in the coming weeks.
Read Next: Jim Cramer Advises Against Using Binance, Provokes Strong Reactions From Twitter Users
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