The Securities and Exchange Commission has dealt a heavy blow to the cryptocurrency market as prices of altcoins tumble in the wake of its lawsuits against major exchanges. Among the hardest hit are Algorand and Flow, which reached all-time lows over the weekend.
According to CoinGecko, Algorand traded at $0.098 and Flow at $0.459 on Saturday, significantly dropping from their respective highs of $0.29 and $1.39 in February. The two coins had experienced a sharp decline plummeting more than 28 percent in just seven days. Both tokens have since rebounded slightly, with ALGO regaining over 12.5 percent and FLOW up just over 10.5 percent since the drop.
The SEC’s lawsuits targeted Binance and Coinbase, but the consequences reverberated across the crypto market as the regulatory body identified several cryptocurrencies as unregistered securities. Algorand and Flow were caught in the crosshairs, leading to sharp price declines.
“Given that FLOW are required to interact with the Flow blockchain, the demand for and the value of the FLOW token would increase as a result of Dapper Labs’ and the Flow development team’s efforts to develop the Flow blockchain network,” the SEC claimed in its lawsuit against Coinbase.
The SEC lawsuit against Binance brought Algorand’s listing into focus, while the lawsuit against Coinbase highlighted the availability of Flow. Notably, the organizations connected to these tokens were not named defendants in the lawsuits.
Algorand was founded in 2017 by computer scientist and MIT professor Silvio Micali. The project aimed to create a fast and scalable platform for decentralized applications. As one of the top 50 cryptocurrencies by market cap, the total value of ALGO stands at approximately $796 million.
The SEC initially labeled ALGO as a security when it filed charges against Bittrex in April. Allegedly, the token’s initial sale conducted by the Algorand Foundation in 2019 at $2.40 per coin was an unregistered securities offering, as it involved an investment of money with the expectation of profits derived from the efforts of others.
While the Algorand Foundation has disputed the securities classification, the negative impact on ALGO holders is evident. Data from IntoTheBlock reveals that almost every digital wallet holding ALGO has experienced losses, with 17.75 million token holders in the red compared to only 28 addresses in the green.
Meanwhile, Flow was launched in 2020 by Canadian firm Dapper Labs to operate as the blockchain network behind prominent NFT projects such as CryptoKitties and NBA Top Shot.
The SEC pointed out FLOW’s ties to Canadian blockchain firm Dapper Labs, where the token is used for staking, transaction fees, and trading digital collectibles within the network. The commission claimed that those supports played a part in FLOW’s increasing value, so the organization called it a security product.
With a total value of $21 million, FLOW has declined over 98 percent from its all-time high of $42.40 in April 2021, now trading around $0.51.
The SEC’s lawsuit against Coinbase emphasizes that FLOW has been available on the exchange since May of the previous year. Additionally, the lawsuit claims that Coinbase Ventures participated in an early fundraising round for Dapper Labs.
Dapper Labs, already facing legal pressure regarding NFTs on its network, was denied a motion to dismiss a separate lawsuit in February.