After the U.S. Securities and Exchange Commission accused Binance, the biggest cryptocurrency exchange in the world, of breaking securities regulations, cryptocurrency values fell on Monday.
According to Coin Metrics, Bitcoin dropped 5.5% to $25,662.50, its lowest point since March.
To $1,807.79, ether fell 5.1%. On the Binance exchange, the value of Binance Coin, a cryptocurrency used to cover transaction and trading costs, fell by 9.5%.
The falls followed claims made by the SEC that Binance and Changpeng Zhao, its co-founder, had mixed billions of dollars in investor money with their own and broken securities laws. The Commodity Futures Trading Commission filed a similar lawsuit against Binance earlier this year, which was followed by this one.
“Any regulatory action taken against a significant player in the cryptocurrency space raises uncertainty and, in the short term, increases market volatility.” Sam Callahan, chief analyst at bitcoin services provider Swan Bitcoin
However, he continued, “such volatility is frequently brief, and prices may recover once the market takes the news in.” As bad actors are eliminated and wealth moves away from cryptocurrencies with high regulatory risk and toward bitcoin, this might be considered as a long-term positive development for the ecosystem.
The lawsuit is the most recent development in this year’s crackdown by American officials on the cryptocurrency sector. The SEC has warned Coinbase of potential securities charges since January and has prosecuted Kraken, Genesis, and Gemini Trust with selling unregistered securities to investors.
After trading in a small range between $26,000 and $28,000 in May, Bitcoin finished the month down 7.9% last Thursday, capping its worst trading month since November. The critical support level for bitcoin on the downside, according to technical experts, is $25,200.