Cardano (ADA) and the crypto market just took a punch from the U.S. Securities and Exchange Commission (SEC). The regulator filed a lawsuit against Binance and its CEO, Changpeng Zhao, contributing to the decline in prices across the nascent market.
Cardano (ADA) trades at $0.35 as of this writing, recording a 6% loss in the last 24 hours. In the last week, the cryptocurrency recorded a 7% and stands amongst the worst performers in the top 10 by market capitalization, only surpassed by Binance Coin (BNB).
SEC Fight Against Binance Splashes Cardano (ADA)
According to the complaint filed by the U.S. regulator in the District of Columbia, Binance has been offering “unregistered securities” since its inception. These alleged securities under U.S. laws 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,” a term which they coined in the last two years. The regulator provides 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 owner of its brand; (2) IOHK, an engineering company controlled by Hoskinson and Wood responsible for designing, building and maintaining the Cardano blockchain; and (3) Emurgo (…).
To sustain their argument, the SEC claims that these entities hold over 16.7% of ADA’s total supply or 31.1 billion ADA. The regulator also claims that the companies sold the token to fund development, marketing, business operations, and other critical project areas.
As of this writing, there is no official reply from these entities, or IOHK (IOG), the company behind Cardano’s development.
Crypto Market Participating Over-reacting To Binance Lawsuit?
Despite the lawsuit, some crypto community members call the event a “nothing burger.” The U.S. regulator is still to provide a clear legal framework for what constitutes a security in this country. In that sense, legal expert Collins Belton believes that today’s bad news could turn into a positive development for the long haul.
Via his Twitter account, the expert stated:
(…) this should actually be seen as a bit of a tension reliever for anyone that hasn’t been wildly deluded on Hopium. This complaint has been hanging above us like a sword of Damocles and letting it fall now in the depths of a bear is probably the best we could hope for.
Belton also believes the crypto market could be “overstating” the complaint. The lawsuit could finally release tension from key actors in the sector in the future, but in the short term, “not much change from status quo,” the expert concluded.
Chart from Tradingview