Tokens SOL, ADA, and MATIC Plummet 20% Following SEC Lawsuit Allegations

Allegations of Tokens as Securities Spark Risk-Off Sentiment Among Traders

In the wake of the recent U.S. Securities and Exchange Commission (SEC) lawsuit against cryptocurrency exchanges Binance and Coinbase, tokens from major blockchain networks experienced a significant decline of over 20% within the last 24 hours. This downward movement can be attributed to a possible risk-off sentiment among traders following the allegations that 13 tokens were deemed securities by the SEC.
Significant losses in the crypto market occurred during the early hours of Saturday, with Solana (SOL), Polygon (MATIC), and Cardano (ADA) experiencing sharp declines of up to 25%. This sudden drop led to speculation on Crypto Twitter about the possibility of a major crypto fund selling its holdings during a period of relatively illiquid market conditions. As a result, the weekly declines for these tokens reached as much as 34%, as indicated by the data.

Also Read: Regulatory Turmoil Triggers Over 15% Plunge in Top AI Tokens

In response to the market downturn, significant tokens like Binance Coin (BNB), Dogecoin (DOGE), and XRP experienced declines of over 11%. Bitcoin (BTC) witnessed a 3.6% drop, while Ether (ETH) slid by 4.5%.

Additionally, data from Coinglass revealed that crypto-tracked futures witnessed approximately $300 million in liquidations during the early hours of Saturday, surpassing the record liquidation figures set earlier in the week.

Crypto liquidation is the procedure of forcefully closing a trader’s positions in the cryptocurrency market. This happens when a trader’s margin account becomes unable to sustain their open positions due to substantial losses or insufficient margin to meet the maintenance requirements. In such cases, the exchange or platform automatically liquidates the trader’s positions to mitigate further losses and protect the integrity of the trading system.

Earlier this week, the U.S. Securities and Exchange Commission (SEC) identified several tokens, including Polygon (MATIC), Sandbox (SAND), Filecoin (FIL), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager (VGX), Dash (DASH), and Nexo (NEXO), as securities.

This regulatory development has prompted certain retail trading platforms like Robinhood to cease support for tokens such as ADA, SOL, and MATIC, likely in response to the SEC’s actions. The classification of these tokens as securities has introduced uncertainty and potential challenges for their trading and availability on various platforms.

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Also Read: Kraken NFT Officially Launches, Introducing Polygon Integration

Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.

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