The cryptocurrency sector is currently facing renewed uncertainty due to the recent action by the Securities and Exchange Commission (SEC) over assets that may be classified as securities.
As a result, prominent cryptocurrencies like Cardano (ADA), Solana (SOL), and Polygon (MATIC) have witnessed a significant decrease in their value, raising concerns about their long-term sustainability.
Within the past 24 hours, these three cryptocurrencies have experienced an average decline of 23% in their value. Moreover, they have collectively seen a capital outflow of $6.04 billion in just one day.
For instance, ADA is currently trading at $0.24, reflecting a daily loss of 23.62%. Over the course of the week, the decentralized finance (DeFi) token has witnessed a decline of more than 35%.
Solana, ranked 10th in terms of market capitalization, has plunged by 21.81% within the past 24 hours, currently trading at $14.64. During the last seven days, SOL has experienced a substantial decrease of 30%.
Similarly, Polygon, trading at $0.58, has faced a depreciation of 26% within a day. Over the past week, its value has declined by over 35%.
SEC’s onslaught on crypto
The drop in the assets’ price comes after the SEC unveiled two high-profile lawsuits against crypto exchanges Binance and Coinbase earlier in the week. The lawsuits are related to the listing of alleged unregistered securities.
According to the SEC, assets such as ADA, MATIC, and SOL, which are issued by foundations, companies, or tied to protocols, should be classified as securities in accordance with the regulator’s laws.
Other affected assets include Sandbox (SAND), Filecoin (FIL), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager (VGX), Dash (DASH) and Nexo (NEXO).
Additionally, the price drop has been further compounded by the recent announcement from the popular commission-free trading app Robinhood, stating their plans to terminate support for ADA, MATIC, and SOL from June 29.
Crypto firms hit back
Moreover, the foundations behind these three coins have dismissed the SEC’s claims. The Solana Foundation, for example, has refuted the notion that SOL is security, emphasizing that it is a community-driven project relying on decentralized engagement from users and developers. Similarly, Cardano’s development company IOG has disputed the classification of ADA as a security.
Binance also expressed its disappointment with the SEC’s lawsuit in a recent blog post and highlighted its commitment to engaging in extensive good-faith discussions aimed at reaching a negotiated settlement to resolve the ongoing investigations.
It is worth noting that when confronted with regulatory action from the SEC, companies generally decide between pursuing a settlement or challenging the case in court.
A comparable situation arose when the SEC filed a lawsuit against Ripple in December 2020, asserting that the sale of its XRP token constituted an unregistered securities offering. The case is still ongoing, with both parties awaiting the summary judgment.
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