(Bloomberg) — Minor coins sank in a sharp selloff in crypto markets as a crackdown by the Securities and Exchange Commission on key digital asset exchanges jittered investors.
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Cardano’s ADA fell as much as 25% on Saturday before paring the decline, while tokens including Solana’s SOL, Polygon’s MATIC and Avalanche’s AVAX saw double-digit percentage drops.
Bitcoin, the largest digital asset, was down around 3% as of 10:20 a.m. in London. Second-ranked Ether fell 5.6% to hit its lowest level since late March.
The SEC earlier this week rattled the crypto sector by launching lawsuits against Binance Holdings Ltd., which provides the sector̵[ads1]7;s largest trading platform, and Coinbase Global Inc., operator of the largest digital asset exchange in the United States.
The SEC accused Binance and its founder Changpeng Zhao of mishandling customer funds, misleading investors and regulators, and violating securities rules. Binance has called the SEC action “disappointing” and said it intends to defend its platform “vigorously.”
Coinbase has disputed the SEC’s allegation that it operates an illegal exchange and said it is prepared to take the legal battle all the way to the Supreme Court.
Over a dozen tokens were flagged as unregistered securities in the lawsuits, including Binance’s BNB, Cardano, Solana, and Polygon. The group as a whole was under pressure on Saturday.
While US regulators view Bitcoin as a commodity, SEC Chairman Gary Gensler has long said that most other tokens are subject to the agency’s investor protection laws and that trading platforms should register with the regulator.
But labeling specific tokens represents a tougher approach, part of a crackdown on digital assets this year after a rout in 2022 and a series of explosions, including the bankruptcy of the FTX exchange.
A designation as an unregistered security could make tokens more difficult to trade if exchanges shy away from listing them for fear of angering the SEC. Robinhood Markets Inc. said Friday it will drop Solana, Cardano and Polygon starting June 27.
The BNB token, which can be seen as a gauge of sentiment against Binance, lost about 5% to hit its lowest level since last December.
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