BTC takes punch to the gut with SEC ruling, Binance glitch
It shouldn’t come as much of a surprise, but judging by the market reaction, several events this week had a significant impact on cryptocurrency, particularly legacy Bitcoin (BTC).
The U.S. Securities and Exchange Commission (SEC) has announced that cryptocurrency platforms will be obligated to register with the commission as though they were fully-fledged exchanges. The news didn’t go over too well with the BTC community, and resulted in hefty drop in its value.
After reaching nearly $20,000 in December (Merry Christmas), BTC has now lost about 50% of its value. It dropped to $9,000 at the time of writing. The cryptocurrency community has seen how regulators around the globe appear to be focusing more on blockchains and digital assets, including cryptocurrency mining and trading, and this has raised fears that tighter controls could mean limited trading.
The SEC has taken the stance that, due to the lack of regulatory oversight, a cryptocurrency platform that calls itself an exchange provides a false sense of security to users. In order to protect consumers, the agency decided that the platforms, or exchanges, must be required to register themselves as such. In a statement released on Wednesday, the SEC said, “If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
Some trading platforms, such as GDAX of Coinbase, aren’t registered with the SEC as exchanges. They do, however, hold money transmission licenses with individual states. The trading platform Gemini is registered in New York as a trust company and Templum LLC, an affiliate of Liquid M Capital, is registered with the SEC as an “alternative trading system.” These companies, along with many others, will now have to register as exchanges with the SEC.
Another event went down Wednesday that didn’t do anything to help Bitcoin, either. Binance, an Asia-based and one of the world’s largest cryptocurrency exchanges, became the subject of hacking attempts. Many investors that use the exchange took to both Twitter and Reddit, reporting that their coins had been stolen and used to purchase Viacoin. Viacoin’s value saw a sharp uptick on Wednesday that seemed to corroborate the claims, jumping 28%. Binance officials denied the rumors, but acknowledged the fact that they were witnessing trading irregularities.
Following an investigation by Binance, it was determined that, in fact, the user accounts had been hacked. However, the last laugh would be had by Binance and the users. Binance reversed all of the losses, including the gains earned by the hackers, and returned the stolen amount to the users. The excess that the hackers thought they would earn was given to Binance Charity.
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