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Cryptocurrency

US tightens crackdown on crypto with lawsuits against Coinbase, Binance

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The top U.S. securities regulator sued cryptocurrency platform Coinbase (NASDAQ:COIN) on Tuesday, the second lawsuit in two days against a major crypto exchange, in a dramatic escalation of a crackdown on the industry and one that could dramatically transform a market that has largely operated outside regulation.

The U.S. Securities and Exchange Commission (SEC) on Monday took aim at Binance, the world’s largest cryptocurrency exchange. The SEC accuses Binance and its CEO Changpeng Zhao of operating a “web of deception”.

If successful, the lawsuits could transform the crypto market by successfully asserting the SEC’s jurisdiction over the industry which for years has argued that tokens do not constitute securities and should not be regulated by the SEC.

“The two cases are different, but overlap and point in the same direction: the SEC’s increasingly aggressive campaign to bring cryptocurrencies under the jurisdiction of the federal securities laws,” said Kevin O’Brien, a partner at Ford O’Brien Landy and a former federal prosecutor, adding, however, that the SEC has not previously taken on such major crypto players.

“If the SEC prevails in either case, the cryptocurrency industry will be transformed.”

In its complaint filed in Manhattan federal court, the SEC said Coinbase has since at least 2019 made billions of dollars by operating as a middleman on crypto transactions, while evading disclosure requirements meant to protect investors.

The SEC said Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano and Polygon.

Coinbase suffered about $1.28 billion of net customer outflows following the lawsuit, according to initial estimates from data firm Nansen. Shares of Coinbase’s parent Coinbase Global Inc closed down $7.10, or 12.1%, at $51.61 after earlier falling as much as 20.9%. They are up 46% this year.

Paul Grewal, Coinbase’s general counsel, in a statement said the company will continue operating as usual and has “demonstrated commitment to compliance.”

Oanda senior market analyst Ed Moya said the SEC “looks like it’s playing Whac-A-Mole with crypto exchanges,” and because most exchanges offer a range of tokens that operate on blockchain protocols targeted by regulators, “it seems like this is just the beginning.”

Leading cryptocurrency bitcoin has been a paradoxical beneficiary of the crackdown.

After an initial plunge to a nearly three-month low of $25,350 following the Binance suit, bitcoin rebounded by more than $2,000, exceeding the previous day’s high. It was trading just below $27,000 at 0410 GMT.

“The SEC is making life nearly impossible for several altcoins and that is actually driving some crypto traders back into bitcoin,” explained Oanda’s Moya.

BROKER, EXCHANGE CRACKDOWN

Securities, as opposed to other assets such as commodities, are strictly regulated and require detailed disclosures to inform investors of potential risks. The Securities Act of 1933 outlined a definition of the term “security,” yet many experts rely on two U.S. Supreme Court cases to determine if an investment product constitutes a security.

SEC Chair Gary Gensler has long said tokens constitute securities and has steadily asserted its authority over the crypto market, focusing initially on the sale of tokens and interest-bearing crypto products. More recently, it has taken aim at unregistered crypto broker dealer, exchange trading and clearing activity.

While a few crypto companies are licensed as alternative system trading systems, a type of trading platform used by brokers to trade listed securities, no crypto platform operates as a full-blown stock exchange. The SEC also this year sued Beaxy Digital and Bittrex Global for failing to register as an exchange, clearing house and broker.

“The whole business model is built on a noncompliance with the U.S. securities laws and we’re asking them to come into compliance,” Gensler told CNBC.

Crypto companies refute that tokens meet the definition of a security, say the SEC’s rules are ambiguous, and that the SEC is overstepping its authority in trying to regulate them. Still, many companies have boosted compliance, shelved products and expanded outside the country in response to the crackdown.

Kristin Smith, CEO of the Blockchain Association trade group, rejected Gensler’s efforts to oversee the industry.

“We’re confident the courts will prove Chair Gensler wrong in due time,” she said.

Founded in 2012, Coinbase recently served more than 108 million customers and ended March with $130 billion of customer crypto assets and funds on its balance sheet. Transactions generated 75% of its $3.15 billion of net revenue last year.

Tuesday’s SEC lawsuit seeks civil fines, the recouping of ill-gotten gains and injunctive relief.

On Monday, the SEC accused Binance of inflating trading volumes, diverting customer funds, improperly commingling assets, failing to restrict U.S. customers from its platform, and misleading customers about its controls.

Binance pledged to vigorously defend itself against the lawsuit, which it said reflected the SEC’s “misguided and conscious refusal” to provide clarity to the crypto industry.

Customers pulled around $790 million from Binance and its U.S. affiliate following the lawsuit, Nansen said.

On Tuesday, the SEC filed a motion to freeze assets belonging to Binance.US, Binance’s U.S. affiliate. The holding company of Binance is based in the Cayman Islands.

“It’s important to note that recent regulatory actions are aimed at ensuring that companies operating in the cryptocurrency industry are complying with securities laws and protecting investors – this will always be their goal,” said Joshua Chu, group chief risk officer at blockchain technology firms XBE, Coinllectibles and Marvion.

“These events will ultimately lead to a more stable and trustworthy industry, which could help to attract more institutional investors and mainstream adoption.»

Cryptocurrency

Pi Network (PI) Sees 10% Daily Drop, Bitcoin (BTC) Volatile at $84K (Market Watch)

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The relatively calm weekend was disrupted yesterday with substantial volatility around the $84,000 mark after some large short positions opened on Hyperliquid.

Most altcoins are on a slight retracement today, while BNB has jumped by over 6%. PI, on the other hand, has dumped by almost 10%.

BTC Volatile at $84K

The previous business week went in a highly fluctuating manner, and it all started on Monday with a price slump from $86,000 to $80,000. After a brief recovery to $84,000, BTC headed straight south again on Tuesday and plunged to a four-month low of under $77,000.

Following this $9,000 decline in less than two days, BTC finally reacted positively and quickly reclaimed the $80,000 line. It kept climbing in the following days, especially after the positive US CPI data for February, and jumped above $85,000 on Wednesday.

However, that was another short-lived rally, and the momentum couldn’t be maintained. A drop to $80,000 followed, but BTC managed to defend that level and jumped to $84,000 over the weekend. Most of it was spent there, aside from a brief spike to $85,000 and a subsequent plunge to $82,000 after a trader opened a $366 million short on Hyperliquid.

As of now, BTC stands just under $84,000, with a market cap of $1.655 trillion on CG. Its dominance over the alts is at 58.6%.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

BNB Up, PI Down

The biggest gainer from the larger-cap alts today is Binance Coin, which has jumped by over 5%. As a result, the asset now trades well above $630. In contrast, most other alts from this cohort are in the red.

ETH, XRP, ADA, and TRX are down by up to 1%, while SOL has plunged by over 3.5%. PI is the biggest loser, on the other hand, dumping by 10% to under $1.35.

More volatility comes from OKB and MNT, which have pumped by 5-6%, while TRUMP is down by 3%.

The total crypto market cap has declined by over $20 billion since yesterday and is well below $2.830 trillion on CG.

Cryptocurrency Market Overview. Source: Coin360
Cryptocurrency Market Overview. Source: QuantifyCrypto
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Cryptocurrency

Stablecoin Market Cap Expands Amid Broader Downturn – What Does This Mean?

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Despite the bearish sentiment in the crypto industry, the market capitalization of stablecoins has been on the rise. This growth amid the overall uncertainty drove the combined market cap of these crypto assets above $219 billion last week, placing them $10 billion away from Ethereum’s market cap at the time.

However, at the time of writing, data from CoinMarketCap shows the stablecoin market cap sitting around $233 billion, surpassing Ethereum’s current capitalization by at least $3 billion.

Stablecoin Supply Is Growing

Usually, there are two primary reasons stablecoins begin to see an increase in their supply and, thus, market cap: a rise in buying power or risk aversion.

Market analysts have always maintained that cryptocurrencies need to witness a rise in stablecoin liquidity for bitcoin (BTC) to experience a sustained rally. As with most bull markets, altcoins shoot up when BTC sustains an upward trajectory. With an increase in liquidity, users’ buying power surges, with investors positioning themselves to acquire more assets at lower prices after market sentiment improves.

The second reason, risk aversion, entails investors’ flight to safety. Since the market has been dumping for eight weeks, participants may convert their assets into stablecoins to preserve capital. This indicates that they are exercising caution and being even more careful in their investment approach.

On-chain intelligence platform IntoTheBlock believes the latter is the case currently. The firm stated that the growth in the combined stablecoin market cap is a strong indicator of rising caution in the market.

Could This Cycle Be Halfway in?

Furthermore, the growth in stablecoin supply raises concerns about the market hitting its peak for this bull run because such surges have historically aligned with cycle highs. However, IntoTheBlock insists that this cycle is still halfway in.

“In April 2022, supply hit $187B—just as the bear market started. Now it’s at $219B and still rising, suggesting we’re likely still mid-cycle,” the intelligence firm stated.

Moreover, historical data also shows that the market has peaked 12-18 months post-halving. Since the last halving was in April 2024, IntoTheBlock believes the bull cycle will likely end mid to late 2025, even though institutional flows and regulatory changes have reshaped this cycle.

Meanwhile, recent stablecoin activity examined by market analytics platform CryptoQuant reveals that investors, especially whales, are accumulating BTC, regardless of the continued correction in prices.

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Cryptocurrency

Ethereum Price Analysis: Does ETH Have the Strength to Rise Above $2K?

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Ethereum’s price is yet to show any willingness to recover, as the market has been moving sideways over the past week.

However, the current level can initiate a rebound if the price holds above it.

Technical Analysis

By Edris Derakhshi (TradingRage)

The Daily Chart

ETH’s daily chart remains bearish, with the price struggling to hold above the $1,900 support area after a prolonged downtrend. A breakdown of this level could reinforce further downside, potentially targeting the $1,600 support zone if selling pressure persists. The 200-day moving average remains well above, located around the $2,900 mark, signaling a strong bearish bias.

Meanwhile, the RSI is in the oversold territory, which suggests a short-term bounce could occur. A decisive break above $2,000 with strong volume could shift momentum toward $2,200, but failure to do so would likely confirm continued weakness in the short term.

The 4-Hour Chart

The 4-hour chart shows a breakout from the descending wedge pattern, indicating a potential trend reversal. However, price action remains trapped around the $1,900 resistance zone, with multiple rejections signaling a lack of strong bullish momentum.

The RSI is recovering but still below overbought conditions, suggesting room for further upside if ETH can close above this key resistance area. A confirmed breakout above $2,000 could trigger a rally toward $2,100-$2,200, while failure to hold above $1,900 may lead to a retest of the $1,800 support level. Volume confirmation will be crucial in determining whether this breakout sustains or results in another rejection.

Onchain Analysis

By Edris Derakhshi (TradingRage)

Exchange Reserve

The Ethereum exchange reserve chart shows a continuous decline in the amount of ETH held on exchanges, currently near multi-year lows at around 18.8 million. This suggests a long-term trend of accumulation, as fewer tokens are available for immediate selling. Typically, declining exchange reserves indicate that investors are moving ETH to self-custody or staking, reducing potential selling pressure.

Despite the price drop to $1,900, the lack of a significant spike in exchange reserves implies that panic selling might not be fully materialized, which supports the idea that long-term holders somehow remain confident. From a technical perspective, ETH is at a critical resistance zone near $1,900-$2,000, and if buyers step in, the supply squeeze could lead to a strong recovery.

However, if the asset fails to reclaim key levels and sentiment worsens, some ETH could flow back to exchanges, increasing selling pressure. Watching reserve trends alongside price action will be crucial in determining whether the current downtrend is nearing exhaustion or if further downside remains likely.

 

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

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