The crypto market has been significantly impacted by the recent enforcement proceedings the U.S. Securities and Exchange Commission (SEC) took against well-known cryptocurrency exchanges. In addition to the actions, the agency labeled many cryptocurrencies as unregistered securities, including Algorand (ALGO) and Flow (FLOW), which caused a significant decline in the value of those coins. Significant drops have also been seen in a number of other well-known cryptocurrencies, including Cardano (ADA), Polygon (MATIC), and Solana (SOL).
According to data from CoinMarketCap, ALGO and FLOW both hit record lows over the weekend, trading at $0.098 and $0.459, respectively. These costs are significantly lower than their February highs of $0.29 and $1.39. Both coins experienced their steepest price declines ever in just seven days, losing more than 28% of their values.
The inclusion of ALGO and FLOW into SEC’s list was brought to light by the agency's legal action against Binance and Coinbase. It's crucial to remember that the entities linked to these tokens are not listed defendants in the legal proceedings. Silvio Micali, a well-known computer scientist, invented Algorand in 2017. It was created as a quick and scalable platform for decentralized apps. Algorand's native token, ALGO, is now valued at over $796 million and is ranked 48th by market capitalization.
When charges were brought against the cryptocurrency exchange Bittrex in April, the agency previously designated ALGO as a security. In the industry, there was a stir over remarks made by its chair Gary Gensler while he was a professor at MIT and talked favorably about Algorand. Gensler was accused by detractors of endorsing the idea because of his prior association with the group.
The Algorand Foundation sold ALGO at a price of $2.40 per token in an unregistered securities offering in 2019 that was the subject of both the Binance and Bittrex lawsuits. According to the SEC, this offering constituted an investment of funds in a group venture with the expectation of gains from collective labor.
Despite the designation as securities, the Algorand Foundation has challenged this description, asserting in April that the crypto business would benefit from clear regulatory guidelines. Data from IntoTheBlock shows that almost all digital wallets holding ALGO are currently losing money. As of the time of publication, only 28 addresses out of 17.75 million token holders display a positive balance.
The SEC's designation of FLOW as a security had a substantial effect as well. According to the SEC, Dapper Labs, the Canadian company that created the Flow blockchain, is responsible for the network's expansion and the increase in FLOW's value. Staking, transaction costs, and trading digital collectibles inside the network all require flow.
FLOW, which is currently ranked 74th by market capitalization and has a total market value of $21 million, has fallen more than 98% since reaching an all-time high in April 2021. FLOW has been accessible on Coinbase's platform since May of last year, according to the SEC's lawsuit against the company. It also mentions that Coinbase Ventures, Coinbase's venture division, took part in Dapper Labs' initial investment round.