Although the SEC took official action against the world's two largest exchanges, it also chose to name a number of cryptocurrencies that it describes as unregistered securities, triggering a drop across many altcoins. Two of them—Algorand (ALGO) and Flow (FLOW)—fell to all-time lows over the weekend.
Their inclusion in the SEC's actions has called their regulatory status into question, along with many of crypto’s leading altcoins, like Polygon (MATIC), Solana (SOL), and Cardano (ADA), which have also seen significant declines.
On Saturday, Algorand and Flow traded hands at $0.098 and $0.459, respectively, according to CoinGecko. Both Algorand and Flow are down more than 60% from their respective $0.29 and $1.39 highs in February. Toppling more than 28% during a seven-day span, this week brought the lowest price in both coins’ histories.
The SEC’s lawsuit against Binance highlighted ALGO’s listing, and the agency’s lawsuit against Coinbase called to attention the availability of FLOW. Notably the organizations attached to each token aren’t named defendants in either lawsuit.
Did Gary Gensler Pull a Kim Kardashian by 'Shilling' Algorand?
Crypto Twitter honed in on the connection between SEC Chairman Gary Gensler and Algorand on Monday, after the agency filed a lawsuit against the cryptocurrency exchange Bittrex—claiming several tokens are securities simultaneously. Algorand was one of six tokens named in the lawsuit as alleged examples of “crypto asset securities” available to customers on Bittrex’s platform. They are an essential part of the agency’s claims—proof that Bittrex supposedly operated as an unregistered exchange, bro...
Algorand was founded in 2017 by Silvio Micali, an award-winning computer scientist and professor at MIT, who designed the protocol as a speedy, scalable platform for building decentralized applications. Ranked 48th by market cap, the total value of Algorand’s native token, ALGO, is around $796 million.
The SEC initially claimed ALGO is a security when it filed charges against crypto exchange Bittrex in April. Favorable comments made by SEC Chair Gary Gensler when he was a professor at MIT subsequently surfaced on Crypto Twitter, and a vocal portion of the industry accused Gensler of being a former shill of Algorand and Micali.
In both the Binance and Bittrex lawsuits, the SEC calls out an initial token sale for ALGO conducted by the Alogrand Foundation in 2019 at $2.40 per ALGO. It was an unregistered securities offering, allegedly, because there was an investment of money in a common enterprise with the expectation of profits derived from the efforts of others.
The Algorand Foundation had already pushed back against the securities classification. It refuted the notion in April, adding that “clear regulatory guidelines” would be an advancement for the crypto industry.
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We want to be clear: we believe that Algos are not securities under US law. We welcome clear regulatory guidelines for the advancement and growth of the entire industry.
— Algorand Foundation (@AlgoFoundation) April 19, 2023
Today, almost every digital wallet that holds ALGO is in the red, according to data from IntoTheBlock, a crypto market analytics firm. As of this writing, ALGO has declined for 17.75 million token holders compared to just 28 addresses that are in the green.
Ethereum NFT Hit Doodles Will Launch Doodles 2 on Flow Blockchain
Doodles is one of the most prominent Ethereum NFT projects around, with colorful profile pictures (PFPs) that stand out on social media, more than $550 million in trading volume to date, and musician Pharrell Williams as its chief brand officer. But for its next big drop, Doodles is heading to the Flow blockchain. Today, Doodles announced that its upcoming larger-scale Doodles 2 project will launch on Flow, the Web3 platform best known for sports NFT projects like NBA Top Shot and NFL All Day....
When the SEC called FLOW a security last week, its claims focussed in on the history of Dapper Labs, a Canadian firm that launched the Flow blockchain in 2020 and is behind several recognizable NFT projects like CryptoKitties and NBA Top Shot.
Dapper Labs’ Flow network is also home to NFT Projects like Doodles 2, NFL All Day, and UFC Strike. But the network’s growth over time—and the appreciation of FLOW in value—wouldn’t have happened without the support of Dapper Labs, the SEC claims.
The blockchain’s native token FLOW is used in staking, where holders lock up their tokens and receive rewards for validating transactions on the Flow network. FLOW is also used to pay for transaction fees, or to buy and sell digital collectibles.
“Given that FLOW are required to interact with the Flow blockchain, the demand for and the value of the FLOW token would increase as a result of Dapper Labs’ and the Flow development team’s efforts to develop the Flow blockchain network,” the SEC claimed in its lawsuit against Coinbase.
The token is ranked 74th by market cap, with a total value of $21 million, according to CoinGecko. Yet FLOW has fallen more than 98% since its all-time high of $42.40 in April 2021 to around $0.51, as of this writing.
Moody’s Drops Coinbase Outlook From Stable to Negative Over Medium Term
Moody's Investors Service, one of the top global credit rating agencies, changed its outlook on Coinbase (COIN) from stable to negative. The credit rating agency's note provides an opinion on the potential direction of a stock's rating over a medium-term period, typically 12 to 18 months. The outlook can be positive, stable, or negative. Yesterday’s note comes amid a fresh lawsuit from the SEC against the exchange for allegedly operating as a non-licensed broker and trading in unregistered secur...
The SEC’s lawsuit against Coinbase notes that FLOW has been available on Coinbase’s platform since May of last year. It also claims that Coinbase’s venture arm, Coinbase Ventures, participated in an early fundraising round for Dapper Labs.
Dapper Labs did not immediately respond to a request for comment from Decrypt.
Meanwhile, Dappers Labs faces pressure over NFTs on its network, accused of being securities in a separate lawsuit. A judge denied Dapper Labs’ motion to dismiss the case, brought by a NBA Top Shot user, in February.
With FLOW and ALGO falling to all-time lows this weekend, each token’s tumble likely takes into account well-established challenges faced by their respective networks. But the SEC’s lawsuits against Coinbase and Binance have certainly added more weight to the calculations.
