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The total crypto market capitalization plummeted 3.6% overnight, per CoinGecko data, as the United States Securities and Exchange Commission (SEC) filed a fresh lawsuit against Binance.
The lawsuit alleges that Binance and its CEO Changpeng Zhao failed to block U.S. users from accessing Binance.com, conducting the unregistered offer and sale of crypto, and operating as an unregistered exchange, broker, and clearing house.
“We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk—all in an effort to maximize their own profits,” wrote Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in a press release on Monday.
Given Binance's size, hosting billions in traders across tens of millions of monthly users, the markets have sunk in reaction to the news.
Bitcoin (BTC) and Ethereum (ETH) lost 4.2% and 3.1%, respectively. They last traded at $25,694 and $1,815.
Altcoins, or cryptocurrencies other than Bitcoin, posted larger losses ranging between 5% and 15% over the same period.
PepeCoin (PEPE), the popular frog-themed meme coin, led the daily market’s losses with a 14.9% decline since Monday. Dogecoin (DOGE), the only other meme coin in the list, lost 7%.
The list of top ten losers beyond PepeCoin included The Sandbox (SAND), Sui (SUI), Conflux (CFX), Decentraland (MANA), Trust Wallet (TWT), Terra Luna Classic (LUNC), Fantom (FTM), Aptos (APT), Immutable (IMX), and Axie Infinity (AXS).
Among these, Trust Wallet is Binance-owned. The three metaverse tokens in SAND, MANA, and AXS were listed by the SEC as unregistered securities in the lawsuit against Binance.
Other cryptocurrencies that the SEC regarded as unregistered securities include Solana (SOL), Cardano (ADA), Polygon (MATIC), Coti (COTI) and Algorand blockchains (ALGO), Filecoin network (FIL), and Cosmos hub (ATOM). These tokens suffered losses between 6% to 8% in the last 24 hours.
The total market capitalization of Tether’s USDT increased by $12 billion.
Together with relatively fewer losses in the majors such as Bitcoin and Ethereum and an increased supply of USDT, the trend indicates a strong risk-off move away from high-risk altcoins.