Bitcoin’s value has been dragged down this year by a number of factors, including the worsening macroeconomic climate and the fall of market titans like FTX and Terra.
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Binance, the largest cryptocurrency exchange in the world, was charged by the U.S. Securities and Exchange Commission on Monday for violating securities laws, and cryptocurrency prices fell as a result.
According to Coin Metrics, Bitcoin’s price dropped 5.5% to $25,662.50, making it the cheapest it’s been since March.
The price of ether rose by 5.1 percent, to $1,807.79. The value of Binance Coin, the cryptocurrency used to settle transaction and trading fees on the Binance exchange, fell by 9.5%.
The declines came after the SEC charged Binance and its co-founder, Changpeng Zhao, with violating securities laws due to their mixing of customer and company funds totaling billions of dollars. The complaint is similar to one filed earlier this year by the Commodity Futures Trading Commission against Binance.
Sam Callahan, head expert at bitcoin services firm Swan Bitcoin, told CNBC that the market’s reaction to the news was predictable because Binance is the largest cryptocurrency exchange by trading volume. A regulatory move against a major player in the bitcoin space would increase uncertainty and short-term market volatility.
But, he added, “such volatility is often temporary,” and prices could bounce again once the market digested the news. This “can be seen as a healthy advancement for the community in the long run as bad stars are cleaned out and capital drains from cryptocurrencies with considerable regulative threat and into bitcoin.”
This is the latest development in the United States’ ongoing crackdown on the cryptocurrency business. Since January, Kraken, Genesis, and Gemini Trust have been prosecuted by the SEC with offering unregistered securities to investors, and Coinbase has been warned of possible securities charges.
Bitcoin has finished its worst trading month since November, with a 7.9 percent loss in May. The cryptocurrency traded in a narrow range of between $26,000 and $28,000. The key threshold at which technical experts believe bitcoin will begin to decline is $25,200.