The major cryptocurrency fell late Monday after the Securities and Exchange Commission (SEC) announced that it filed charges against Binance , one of the largest cryptocurrency exchanges, and its founder Changpeng Zhao for alleged security breaches.
What Happened: Bitcoin, the leading cryptocurrency by market cap, recently saw a sharp drop below $26,000.
While prices stabilized above $27,000 last week, the accusations against Binance have renewed concerns about the credibility of the industry and the regulatory oversight of cryptocurrency exchanges. Binance and other exchanges have been under increased regulatory scrutiny for several years.
Like Bitcoin, Ethereum and other major altcoins also saw losses on Monday, with most of the declines occurring in the immediate aftermath of the SEC lawsuit.
In a tweet on Monday, SEC Chairman Gary Gensler said Zhao and Binance were caught in "a vast web of fraud, conflicts of interest, under-disclosure and calculated evasion of the law."
In response, Zhao tweeted: "I wonder if he will ever read the comments under his posts from the consumers he is supposed to protect."
Best Winner (24 Hours)
At the time of writing, the global crypto market cap was $1.09 trillion, down 4.91% from the previous day.
On Monday, the S&P 500 index recovered somewhat but ended up closing lower, erasing earlier gains that took it to its highest in nine months. The benchmark was down 0.2%, while the Nasdaq Composite was down 0.09%. Among the losers was Apple Inc AAPL , which fell about 0.8%, pulling back from an all-time high earlier in the session. Apple announced a series of highly anticipated virtual reality headsets and software updates at its annual Worldwide Developers Conference.
see more : The Best Crypto Day Trading Strategy
Analyst Note: " Everything changed after the announcement that the SEC is suing Binance and the CEO of CZ. 13 lawsuits against the exchange and it seems that regulators will soon consider many unlisted crypto securities. Previously, Binance announced that Richard Teng is expected to replacing CZ of Binance USA as head of market outside the region," said Edward Moya, senior market analyst at OANDA.
Moya added: "Teng is a regulator and that will serve us well as we navigate the upcoming negotiations with US regulators. No more collapse."
According to crypto analyst Michael van de Poppe, the total crypto market capitalization shows several important trends. The market is currently undergoing an important test of the MA and 200 week EMA which will determine the outlook for the market. If the market maintains this critical level, there is a high probability that the current correction will end. However, if momentum wanes and the market is unable to stay above the moving averages, there is a possibility of a downward continuation.
Chain analytics firm Santiment said news of Binance's SEC filings led to the third-worst market performance this year, with only March 8 and April 17 being worse. The extent of the impact on markets is unclear, and mostly the likelihood of a recovery indicates the severity of the situation in the coming weeks.
Read more : Jim Cramer advises against using Binance, prompting a backlash from Twitter users