SEC shakes up the crypto market: Algorand and Flow Tumble, altcoins in danger?

The SEC appears determined to take drastic measures in the crypto sector. After officially targeting two major crypto exchanges, it is now intervening in crypto. The classification of certain cryptos as unregistered securities has triggered a price drop for many altcoins. Among them, Algorand and Flow reached their lowest levels over the weekend.

Regulatory status of numerous altcoins questioned

The SEC has labeled numerous altcoins as unregistered securities, calling into question their regulatory status. This includes Solana, Polygon, Cardano, Algorand, Flow, and many others. They have experienced significant declines following the SEC’s actions. However, the prices of Algorand (ALGO) and Flow (FLOW) have been the most impacted. They have dropped over 60% from their respective peaks in February and are down 28% in the past seven days.

The SEC initially claimed that ALGO was a security when it filed a lawsuit against the Bittrex exchange in April. Algorand Foundation opposed this classification, emphasizing the need for clear regulatory guidelines to advance the crypto industry. The SEC also deemed Flow a security, focusing on Dapper Labs’ history.

SEC cracks down on Binance and Coinbase

The classification given to Algorand and Flow follows the SEC’s lawsuits against the exchanges Binance and Coinbase. In the lawsuits against Binance and Bittrex, the SEC states that the initial coin offering (ICO) for ALGO was an unregistered securities offering. The agency explains that there was an investment of money in a common enterprise with the expectation of profits derived from the efforts of others.

Regarding Flow, the SEC deems it a security due to Dapper Labs, a Canadian company that launched the Flow blockchain and several NFT projects. In its legal action against Coinbase, the SEC highlighted the connection between FLOW and Dapper Labs in the development of the Flow blockchain network.