The crypto market faced a sharp decline, with a 3.6% drop in total market capitalization, following the announcement of a new lawsuit by the United States Securities and Exchange Commission (SEC) against Binance, a prominent cryptocurrency exchange.
In the lawsuit, the SEC alleges that Binance and its CEO, Changpeng Zhao, failed to comply with regulations by allowing U.S. users to access Binance.com, engaging in unregistered crypto offerings and sales, and operating as an unregistered exchange, broker, and clearing house.
The SEC’s Director of Enforcement, Gurbir S. Grewal, emphasized that the alleged actions put customers and investors at risk while prioritizing their own profits.
Given Binance’s substantial user base and market influence, the news of the lawsuit had a significant impact on the overall market sentiment. Major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) experienced losses of 4.2% and 3.1%, respectively, with their prices settling at $25,694 and $1,815.
Altcoins, including meme coins, suffered even larger losses, ranging from 5% to 15%. PepeCoin (PEPE), a popular frog-themed meme coin, led the market’s daily decline with a substantial 14.9% drop since Monday. Dogecoin (DOGE), another meme coin, also faced a 7% decrease.
Among the top ten losers were tokens such as The Sandbox (SAND), Sui (SUI), Conflux (CFX), Decentraland (MANA), Trust Wallet (TWT), Terra Luna Classic (LUNC), Fantom (FTM), Aptos (APT), Immutable (IMX), and Axie Infinity (AXS).
Notably, Trust Wallet, a token owned by Binance, was among the affected tokens. Additionally, the SEC listed three metaverse tokens, SAND, MANA, and AXS, as unregistered securities in the lawsuit against Binance.
The SEC’s classification of several other cryptocurrencies as unregistered securities also contributed to the market decline. Tokens like Solana (SOL), Cardano (ADA), Polygon (MATIC), Coti (COTI), Algorand (ALGO), Filecoin (FIL), and Cosmos (ATOM) experienced losses ranging from 6% to 8% within the past 24 hours.