Cardano Caught in Binance-SEC Crossfire, Labeled a Security

The SEC has accused Cardano of being an unregistered security in the Binance case.

In a galaxy Gary Gensler and Changpeng Zhao looking at Cardano approaching.
Created by Kornelija Poderskytė from DailyCoin
  • The SEC has sued leading crypto exchange Binance. 
  • The SEC’s offensive also directly targeted Cardano. 
  • The regulator made many claims about Cardano in its official documents. 

The US Securities and Exchange Commission (SEC) has launched an offensive against the crypto industry, setting its sights on two of the largest crypto exchanges in the country, Coinbase and Binance

The SEC’s shot has sent tremors throughout the industry, with shrapnel hitting the crypto market and leading tokens like Cardano, Solana, and Polygon accused of being unregistered securities. 

Caught in the Crossfire

On Monday, June 5, the SEC launched a high-profile lawsuit against Binance, accusing the exchange of mishandling customer funds and engaging in wash trading. The regulator listed ten crypto assets as unregistered securities in its complaint. 

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This includes BNB (BNB), Binance USD (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS), and COTI (COTI).

The SEC made many claims in the official document based on incorrect facts and conveniently neglected crucial information. One of the claims was that Cardano’s three founding entities, IOHK, The Cardano Foundation, and Emurgo, owned the protocol. 

Despite including an image of the Cardano roadmap, the SEC failed to mention the protocol’s commitment to decentralization, which includes using Stake Pool Operators (SPOs) and governance systems. The regulator also didn’t consider the upcoming Voltaire update, which aims to facilitate the transfer of control to the community. 

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Adding to its many allegations, the SEC emphasized that Cardano sold its tokens at an average price of $0.00024 each. However, it did not acknowledge the ICO took place in Japan and was not accessible to US investors. 

Cardano coinmarketcap price chart.
Cardano price chart. Source: CoinMarketCap.

Nevertheless, due to the SEC’s allegations, Cardano’s ADA token experienced a sharp 10% decline from $0.38 to $0.34. However, with the crypto community’s support, including the Cardano Foundation, the asset has regained some losses. At press time, Cardano sat at $0.35.

The Cardano Foundation Responds

In response to the SEC’s accusations, Fedrick Gregaard, CEO of the Cardano Foundation, refuted all of the allegations. Gragaard expressed his disagreement, sharing: 

“The Cardano Foundation disagrees with the recent qualification of ADA as a security under US law. We look forward to the continued engagement with regulators and policymakers to achieve legal clarity and certainty on these matters.” 

Gregaard further affirmed that despite the regulatory turmoil, the Cardano Foundation remains dedicated to contributing to Cardano’s vibrant and diverse ecosystem. 

Cardano Founder Charles Hoskinson also chimed in on the matter. He warned users the SEC was motivated by the emergence of a hidden agenda. Hoskison added that the recent string of actions would lead to implementing CBDCs in collaboration with massive banks to control citizens’ financial life and freedom. 

The founder urged the crypto community to set aside its differences and unite to set guidelines that could prevent the US from slipping into a dystopian future. 

On the Flipside

Why This Matters

The SEC’s decision to enforce action on leading crypto exchanges in the US could decide the fate of cryptocurrencies in the country. Its decision to classify assets like Cardano as securities can also cast a shadow of doubt and uncertainty in the market, pressuring exchanges to delist them or face the hammer.

Read what Charles Hoskinson has said about the Binance-SEC case: 

Cardano’s Charles Hoskinson Claims SEC-Binance Case Is an “Agenda for CBDC Implementation.”

Catch up on the aftermath of the SEC case: 

Crypto Markets Shed Billions After SEC Sues Binance, Coinbase

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Insha Zia

Insha Zia is a senior journalist at DailyCoin covering crypto developments, especially in the Cardano ecosystem. With a Bachelor of Science in Computer Systems Engineering, he delivers high-quality articles with his technical background and expertise in data analysis and programming languages, aiming to educate and inform readers accurately, transparently, and engagingly. Insha believes education can drive mass adoption of the crypto space, and he is committed to giving DailyCoin readers a better understanding of the technology.