- Cryptocurrencies like Solana, Polygon, Cardano among others face regulatory backlash from the SEC, which accuses them of being unregistered securities.
- The collective market capitalizations of these tokens have dropped by 15%, a loss of $5 billion since the start of June 2023.
The blockchain arena has recently been stirred by the Security and Exchange Commission’s (SEC) accusatory finger, pointing at Solana, Polygon, Cardano, and several others as unregistered securities. This regulatory onslaught has triggered a 15% erosion in their collective market capitalization, amounting to $5 billion, as per CoinGecko data analyzed by Decrypt.
The SEC charged Binance and Coinbase, two of the most substantial crypto exchanges, with allegations of selling unregistered securities on June 5 and 6. In response, the industry was quick to label these declarations as “pretty unfair.” Despite the industry’s protest, the tokens haven’t escaped the ensuing financial storm.
Binance and its CEO, Changpeng Zhao, have been hit with 13 charges, accused of commingling customers’ funds and attempting to circumvent U.S. securities laws through “sham controls.” In the same breath, the SEC included Solana, Polygon, Cardano, and several other coins in their allegations.
The SEC’s legal suit has drawn attention to a select few tokens including: Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos Hub (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and COTI (COTI).
By June 12, Messari Crypto in its Ecosystem Brief: Rollup Specialization report, indicated a 25% drop in the emerging markets category that houses many of these ‘labeled’ securities, subsequent to the lawsuits. However, some like Filecoin and Algorand have already started to claw back, being only 2% off their pre-lawsuit market capitalizations.
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In contrast, Binance has been bearing the brunt of global regulatory clampdowns. The aftermath saw Binance’s exchange utility token, BNB, lose 21% of its market value, tumbling from $47 billion to $37 billion post-SEC lawsuit. Similarly, Charles Hoskinson’s Cardano experienced a 17% dip in market cap, now trading at $0.29, down from its initial $10 billion.
Polygon has had the roughest ride, holding about $6 billion in market value today, marking a 20% dip from its $8 billion market cap at the start of June. Other tokens like Avalanche (AVAX) and Optimism (OP), though not named in the SEC lawsuit, still saw losses, with AVAX dropping roughly 6% in market cap since the lawsuits were filed.
The SEC’s accusations continue to cast a cloud of uncertainty over these cryptocurrencies’ future. As the scenario unfolds, investors and blockchain enthusiasts watch keenly for any developments that could potentially shift the market dynamics.
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