Bitcoin was down approximately 4%, Ether about 4.5%, and Binance’s token, BNB, dropped approximately 8% in the first hour after the Securities and Exchange Commission sued top crypto exchange Binance and Changpeng Zhao, its founder and CEO, in a 136-page court filing.
The precipitous decreases in the largest cryptocurrencies by market capitalization mirrors the downswing of the broader market, as the total market capitalization for all cryptocurrencies dropped approximately 4.5% in the first hour after the suit, according to CoinMarketCap.
At time of publication, some cryptocurrency prices started to bounce back—Bitcoin was hovering around $25,800 after dipping below $25,500—but the effects of the SEC’s lawsuit indicate Binance’s outsize influence. The exchange did more than 10 times the volume of Coinbase, for example, in the past 24 hours, but saw $69 million in trading outflow after news of the SEC’s lawsuit broke, per CoinDesk. Shares of Coinbase, the largest U.S. exchange, were down double digits.
The Commodity Futures and Trading Commission had previously sued Binance and Zhao in a separate case in March, alleging that the exchange knew it was “violating CFTC rules.” Prices for some of the top cryptocurrencies similarly dropped after the suit became public.
The SEC’s lawsuit against Binance alleges similar findings, filing 13 charges against the exchange and Zhao, alleging an “extensive web of deception” and “blatant disregard of the federal securities laws and the investor and market protections these laws provide.”
“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously,” Binance said in a blog post on Monday. “Unfortunately, the SEC’s refusal to productively engage with us is just another example of the commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.”