The fallout from the US Securities and Exchange Commission (SEC) lawsuits against major cryptocurrency exchanges Binance and Coinbase is starting to be reflected in the market.
The legal action sent shockwaves throughout the crypto market, affecting many of the tokens in the lawsuit as evidence that exchanges are trading crypto securities. Analyzing the performance of these coins against bitcoin since the announcement of the cases produced the following chart.
On June 6, the tokens cited in the lawsuit began to decline, with the selloff intensifying on June 10 for most of them.
Gaming-related tokens such as CHZ, SAND, MANA, FLOW, and AXS all saw double-digit declines of up to 28%.
The only coin that survived the June 10 crash was Nexo’s native coin.
Tokens mentioned in one or both suits include SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, NEXO, ATOM, SAND, MANA, ALGO, and COTI. The chart below shows a screener of the tokens and their performance through 2023.
Potential Security Token Display
Of all the tokens listed in the lawsuit, Nexo’s native token has outperformed the others by some margin when denominated in bitcoin.
The token used on the Nexo exchange to unlock higher yields and other features is down just 5.19% over the past month. Furthermore, it is down 40% since the beginning of the year, ranking sixth in the year-to-date (YTD) ranking of the tokens mentioned in the lawsuit.
Nexo pulled out of the US in 2022, citing “lack of regulatory clarity” as the main reason behind the decision. The move does not mean that Nexo will be immune from prosecution by the SEC, as the regulatory body could still take legal action against the company for past activities or violations involving US-based customers.
However, it appears that NEXO has avoided the same slump affecting other coins.
Cardano (ADA) showed resilience even in the face of adversity with a weekly gain of 4.48%, indicating a slight recovery since the trial. However, when comparing its monthly and yearly performance, Cardano faced a decline of -26.24%.
In addition, Polygon (MATIC), Sandbox (SAND), Cosmos (ATOM), Decentraland (MANA), Algorand (ALGO), and Coti have all managed to gain some market share over the past seven days.
In particular, tokens with high trading volumes on Binance, such as ADA and MATIC, weathered the storm better than tokens with low trading volumes, such as FLOW.
Solana (SOL) experienced a weekly change of -0.65% as the price struggled to correct after a broad selloff in the market. However, its overall performance has remained relatively stable this year, with a price decline of only -1.18%.
Solana was also affected by the collapse of FTX due to its association with the exchange’s founder, Sam Bankman-Fried, which caused SOL to fall by over 70% before recovering somewhat. When the SEC lawsuit was issued, SOL’s price was down 91% from its all-time high and subsequently fell a further 21.9%.
Furthermore, coins such as FLOW, AXS, and NEAR have suffered a more significant impact, struggling to recover, with weekly changes of -1.08%, -0.89%, and -0.34%, respectively. These tokens have experienced a substantial decline in both their monthly and yearly performance.
Reviewing the data, it is clear that the lawsuits have undoubtedly affected the performance of the mentioned coins. While some coins have shown signs of recovery, others have been hit more severely and are struggling to regain their former price levels.
Across the broader crypto market, SEC lawsuits have had a significant impact on the cryptocurrency market, affecting tokens labeled as securities and leading to mass liquidations, with over $200 million wiped out. Occurs from traders holding positions in the market within an hour.
The total market capitalization of digital assets decreased by 2.87% to $1.12 trillion. Additionally, the cryptocurrency market saw a net outflow of over $40 billion in the first 24 hours following the release of the lawsuits, with losses across all of the top 10 cryptocurrencies.
As the crypto industry continues to debate next steps, the outcome of the SEC’s lawsuit against Binance and Coinbase will play a key role in shaping future market dynamics. Regulatory measures and their impact on various tokens and exchanges remain uncertain, attracting the attention of investors and industry professionals.
Despite the initial turmoil, some tokens have demonstrated resilience, highlighting the adaptability within the market. The long-term impact of the lawsuits on the cryptocurrency landscape is yet to be determined.
*All figures are as per TradingView data as on 12 June.
Disclaimer: Nexo has been an advertising partner of CrytoSlate.