The prices of cryptocurrencies Binance Coin (BNB) and CAKE, two major assets of the binanceplummeted significantly after the U.S. Securities and Exchange Commission (SEC) lawsuit against the largest brokerage in the market.
According to CoinMarketCap data, BNB has seen a drop of more than 8%, from $300 to $260 in just two hours. The CAKE token saw a drop of about 9%, from $1.70 to $1.50.
The fall in BNB and CAKE prices comes amid allegations from the SEC that Binance has mixed client funds and was acting as an unregistered broker. The allegations have led to investor uncertainty and worry, which has had a direct impact on the market.
Binance says BNB is not security
In response to these allegations, Binance stated that BNB cannot be considered a security. The exchange states that BNB is a native token designed to create an internal economy, deriving value from platform participants.
Despite Binance’s position, the SEC’s action has shaken investor confidence in the cryptocurrency market.
While investors await news on the development of the situation, the market as a whole is alert to the consequences of the lawsuit against Binance.
The impact on BNB and CAKE prices is just one of the immediate consequences, but it is important to note that the cryptocurrency market is highly volatile and reacts quickly to such events.
Bitcoin falls
The cryptocurrency market was surprised by the news that Binance is being sued by the SEC.
The release of a statement from the US regulatory body sparked a general downtrend across the industry, sending Bitcoin down more than 5% in just one hour.
The sharp declines of major cryptocurrencies in terms of market capitalization reflect the broader downturn in the market, with the total market capitalization of all cryptocurrencies falling by around 5.5% in the first hour after the SEC filing was announced.
While some cryptocurrency prices have begun to recover at the time of writing, with Bitcoin trading around $25,800 after falling below $25,500, the effects of the SEC lawsuit highlight Binance’s outsized influence in the market.
Binance had more than 10x the trading volume of the No. 2 in the last 24 hours, but it posted a $69 million trading flow after news of the SEC lawsuit broke. Shares of Coinbase, the largest US exchange, also fell by double digits.
It is worth noting that the Commodity Futures and Trading Commission (CFTC) sued Binance and Zhao in a separate case earlier in March, alleging that the exchange knew it was violating CFTC rules. The prices of some major cryptocurrencies also fell when this lawsuit went public.
The SEC lawsuit against Binance includes 13 charges against the exchange and its CEO, alleging an “extensive web of deception” and a “blatant disregard for federal securities laws and the market and investor protections they provide.”
In response to the lawsuit, Binance stated that it takes the SEC’s allegations seriously, but argued that they should not be the subject of an enforcement action, much less on an emergency basis.
The exchange has expressed its intention to vigorously defend its platform and has criticized the SEC’s refusal to provide clarity and guidance to the digital asset industry.
Finally, the next few days will be crucial to monitor investor reaction and the unfolding of SEC actions regarding Binance.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
