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

The SEC seems determined to take drastic action in the crypto sector. After taking official action against two major crypto exchanges, it is now intervening in cryptocurrencies. The classification of some cryptos as unregistered securities has triggered a drop in the price of many altcoins. Among them, Algorand and Flow bottomed out over the weekend.

Questioning the regulatory status of many altcoins

The SEC has described many altcoins as unregistered securities, which has called into question their regulatory status. We find Solana, Polygon, Cardano, Algorand, Flow and many more. They saw significant declines following the actions of the SEC. However, the prices of Algorand (ALGO) and Flow (FLOW) were the most impacted. They have fallen more than 60% from their respective highs in February and are down 28% in seven days.

The SEC first asserted that ALGO was a security when it filed a lawsuit against the Bittrex exchange in April. The Algorand Foundation opposed this classification. She has underline the need for clear regulatory guidelines to advance the cryptocurrency industry. The SEC also called Flow a security focusing on the history of Dapper Labs.

SEC: Crackdowns on Binance and Coinbase

The classification given to Algorand and Flow follows the lawsuit filed by the SEC against the Binance and Coinbase exchanges. In the lawsuits filed against Binance and Bittrex, the SEC mentions that the ICO (initial token sale) for ALGO was an unregistered securities offering. The agency explains that there was an investment of money in a joint venture with the expectation of profits derived from the efforts of others.

Regarding Flow, the SEC qualifies it as a security due to Dapper Labs. This is a Canadian company that launched the Flow blockchain as well as several NFT projects. In its lawsuit against Coinbase, the SEC highlighted the connection between FLOW and Dapper Labs in the development of the Flow blockchain network.