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Cardano (ADA) and the crypto market just took a punch from the US Securities and Exchange Commission (SEC). The regulator filed a lawsuit against Binance and its CEO, Changpeng Zhao, for contributing to the drop in prices in the nascent market.
Cardano (ADA) is trading at $0.35 as of this writing, registering a loss of 6% over the past 24 hours. In the past week, the cryptocurrency registered a 7% gain and is one of the worst performers in the top 10 by market capitalization, surpassed only by Binance Coin (BNB).
SEC Fight Against Binance Splash Cardano (ADA)
According to Complaint According to the filing by the US regulator in the District of Columbia, Binance has been offering “unregistered securities” since its inception. These purported securities under US law include Cardano (ADA), Polygon (MATIC), Solana (SOL), Filecoin (FIL), Cosmos Hub (ATOM), Algorand (ALGO), and others.
On the document, the SEC classifies ADA as a “crypto security”, which they coined over the past two years. The regulator provided an overview of the token’s history, claiming the following and potentially arguing against ADA’s decentralization:
Today, three entities are responsible for Cardano: (1) the Cardano Foundation, a Swiss entity that is the legal custodian of the Cardano protocol and owns its brand; (2) IOHK, an engineering company controlled by Hoskinson and Wood responsible for the design, construction and maintenance of the Cardano blockchain; and (3) emargo (…).
To support its argument, the SEC claims that these entities hold 16.7% of the total supply of ADA, or 31.1 billion ADA. The regulator also alleges that the company sold tokens to fund development, marketing, business operations and other important project areas.
As of this writing, there is no official answer from these entities, or IOHK (IOG), the company behind Cardano’s development.
Is The Crypto Market Overreacting To The Binance Lawsuit?
Despite the lawsuit, some members of the crypto community refer to the event as the “Nothing Burger”. The US regulator has yet to provide a clear legal framework for what constitutes a security in this country. In that sense, legal expert Collins Belton believes today’s bad news could turn into a positive development for the long haul.
Via his Twitter account, the expert where did it go,
(…) It really should be viewed as a stress reliever for anyone who hasn’t been wildly sedated on hopium. This grudge hangs over us like the sword of Damocles and letting it now fall into the depths of a bear is probably the best we can hope for.
Belton also believes that the crypto market may be “exaggerating” the complaint. The expert concluded that the lawsuit may eventually release tensions from major actors in the sector in the future, but in the short term, “not much change from the status quo”.
charts from tradingview
