Why the Crackdown on Binance and Coinbase May Eventually Benefit BTC

Allegations of securities violations are made in SEC lawsuits filed against Binance and Coinbase

Two of the largest centralized cryptocurrency exchanges operating in the US have been sued by Gary Gensler's SEC. Both Binance and Coinbase are accused of violating securities laws, according to the Securities Exchange Commission. The selling of particular coins, which the SEC is now referring to as securities, is at the crux of the claims. Without the commission providing any previous warning that these coins would be classified as securities, the list of coins that have been designated as securities has increased dramatically.

The catalysts for the SEC's aggressive stance are Ripple and Terraform Labs

The list officially began in December 2020 when the SEC accused Ripple Labs of selling XRP in the US in 2013, which amounted to selling an unregistered securities offering. They have recently adopted a considerably more adversarial and confrontational approach following the selection of Gary Gensler to lead the SEC in 2021.

Following the demise of Terraform Labs in February, the grouping of crypto assets accelerated. This included the Terra Luna Classic (LUNC), Terra Classic USD (USTC), Mirror Protocol (MIR), and 13 mirrored assets that sought to mimic the behavior of large-cap tech companies. Then, in April, the SEC accused Bittrex of running an unregistered national securities exchange and added six additional tokens—OMG, Dash, Algorand, Monolith, Naga, and IHT—to the increasing list of tokens that are considered securities.

Impact on Key Crypto Assets: Market Cap Reductions and Long-Term Consequences

The coins that were mentioned, with the exception of Ripple (XRP) and Dash, did not significantly advance the crypto business and, as a result, did not impede its growth in the US. However, several of the coins mentioned in these most recent charges against Coinbase and Binance are important players in the market and represent both a sizable market value as well as chains that are widely utilized and developed. BNB, Solana (SOL), Cardano (ADA), Polygon (MATIC), and SAND are the coins I'm referring to.

At 6:20 EST on June 14th, all the coins included in the Coinbase and/or Binance lawsuit were trading 4% down on average. One of the most advanced layer one blockchains, Solana, had more developers than the majority of other blockchains and had a lot of potential in the past. Since the revelation of accusations against Binance on June 5th, in which Solana was designated as a security by the SEC, SOL has decreased by about 30%.