SEC triggers crypto bloodbath as Coinbase, Kraken brace for token delistings after Binance lawsuit

The Securities & Exchange Commission (SEC), the premier US financial regulator, now controls $115 billion in cryptocurrencies with its lawsuit against Binance. In its latest move against Binance Holdings Ltd., the regulator expanded a list of digital tokens deemed unregistered securities, unnerving investors on US-based exchanges like Coinbase and Kraken. 

Also read: Binance and CEO face 13 charges by the SEC, citing securities laws violation

SEC expands regulatory net, experts predict losses in crypto tokens

The SEC expanded its regulatory net to cover $115 billion in different cryptocurrencies after its latest lawsuit against Binance. The financial regulator’s allegations against Binance Holdings Ltd. and CEO Changpeng Zhao are related to deception, conflicts of interest, lack of disclosure, and calculated evasion of the law. 

Arca Chief Investment Officer Jeff Dorman argues that the regulator’s crackdown on Binance is hurting crypto tokens listed on Coinbase, Kraken and other US-based cryptocurrency exchanges. 

The SEC alleges that the following crypto assets traded on Binance’s exchange platform are securities:

Binance Coin (BNB), Binance USD (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos Hub (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS) and COTI (COTI)

SEC allegations against Binance 

With the SEC’s crackdown on these assets, other exchanges targeted with similar charges and allegations like Coinbase are likely to delist these tokens, plunging the crypto ecosystem into a renewed winter. 

SEC wipes out $50 billion in crypto market capitalization

The regulator’s legal tussle with crypto exchanges and its views on tokens considered as securities has wiped out over $50 billion in market capitalization overnight. Based on data from CoinGecko, the total crypto market capitalization of the ecosystem lost more than 4% of its value between Monday and Tuesday. 

Total crypto market capitalization data from CoinGecko

The designation of cryptocurrencies as securities brings in investor protection rules and other regulations that are likely to pose a challenge in trading these assets on exchanges. Cryptocurrency trading platforms are likely to shy away from listing assets deemed securities for fear of regulatory violation.

At the time of writing, the combined market capitalization of the assets named as securities by the SEC is $85.3 billion.