Bitcoin fell almost 6% and Ether lost 5% in a broad market fall by all top 10 non-stablecoin cryptocurrencies on Tuesday morning in Asia after the U.S. Securities and Exchange Commission (SEC) sued cryptocurrency exchange Binance and its founder Changpeng Zhao on charges of securities violations. The BNB token issued by Binance was the biggest loser with a drop of more than 10% in the past 24 hours.

Top 10 cryptos slide

Bitcoin dropped 5.66% over the last 24 hours to US$25,730 at 7:10 a.m. in Hong Kong, bringing losses over the past seven days to 7.23%, according to data from CoinMarketCap.

Ether fell 4.91% in the same period to US$1,808, and logged a 4.56% weekly loss.

BNB skidded 10.21% to US$275.17 in the last 24 hours, losing 11.61% over the past week.

The SEC on Monday filed 13 charges against Binance, alleging the exchange made unregistered and unlawful offers and sales of its BNB and BUSD tokens. The SEC also alleged that Binance did not register as an exchange or a broker-dealer clearing agency.

In response to the SEC lawsuit, Binance said in a Tuesday statement that it intends to defend its platform “vigorously.”

“The SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry,” Binance said.

Cryptocurrencies traded on the Binance exchange, including BNB, BUSD, Solana, Cardano’s ADA, Polygon’s MATIC, are securities and require registration and regulation, according to the SEC suit.

Solana dropped 9.52% over the past 24 hours, with ADA falling 7.73% and MATIC losing 7.64%.

“The total crypto market cap is down,” Justin d’Anethan, head of APAC business development at Belgium-based crypto market maker Keyrock, told Forkast on Tuesday morning in Asia. “The fact that the news doesn’t come as a shock doesn’t mean that it was priced in, apparently.”

In a Monday tweet, SEC Chair Gary Gensler said that Zhao and Binance entities engaged in “an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law.”

In response, Zhao tweeted: “Wonder if he ever reads the comments under his post, from the consumers he is [supposed] to protect.”

According to d’Anethan, the SEC’s legal action is not a surprise considering the U.S. Commodity Futures Trading Commission had earlier filed a lawsuit against Binance for alleged violations of trading rules for derivatives.

However, traders see the lawsuit as extremely bearish and it’s shaking up the market, he said.

The total cryptocurrency market cap fell 4.6% to US$1.09 trillion in the 24 hours through to 8:30am Hong Kong, while trading volume surged 118% to more than US$48 billion.

Apple headset bumps Binance in NFT market

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast Labs umbrella.

In the non-fungible token (NFT) market, the Forkast 500 NFT index edged down 0.17% to 3,295.91 in the 24 hours to 9:20 a.m. in Hong Kong.

The SEC’s lawsuit against Binance “hasn’t had an impact on NFTs yet, but it likely will,” Yehudah Petscher, NFT Strategist at Forkast Labs, the parent company of Forkast.News, said on Tuesday. “It has already impacted crypto, and usually NFTs lag behind just a bit.”

In the U.S. overnight, Apple Inc. unveiled its highly-anticipated mixed-reality headset Vision Pro. While priced at a hefty US$3,499, the headset has got the NFT industry excited about its potential application in metaverse developments.

“Apple’s headset is really all the NFT spaces was talking about today and rightfully so,” Petscher said. “Really, it’s the single most important thing to happen to NFTs since CryptoPunks, even though Apple didn’t mention NFTs or the metaverse once in their reveal of the Vision Pro.”

Sébastien Borget, co-founder and chief operating officer of decentralized gaming giant The Sandbox, said in a Tuesday interview with Forkast that Apple’s headset is “opening a big field of opportunity” for metaverse developments.

“This has the highest chance of becoming a game changer versus everything we’ve seen so far over the past five years in this field … allowing people to interact with their virtual assets in the physical world.”

NFT sales on Ethereum rose 5.64% over the last 24 hours to US$25.75 million, and gained 90.84% in the past week. Sales on the Bitcoin network climbed 4.17% to US$3.16 million, but recorded a 11.87% weekly decline.

Bored Ape Yacht Club (BAYC) and Azuki remained the two most-sold Ethereum collections. BAYC had the biggest sales in the past 24 hours of US$7.26 million, followed by Azuki’s US$2.65 million.

DMarket, a Mythos blockchain-based collection of gaming NFTs, was the third most-sold collection over the past 24 hours with an 11.49% rise in sales to US$1.52 million.

Coinbase shares hit by Binance

Image: Coinbase

Shares of Coinbase, the largest crypto trading platform in the U.S., dropped 9.05% on Monday following the SEC’s lawsuit against Binance. Shares of MicroStrategy, the world’s largest corporate holder of Bitcoin, fell 8.53%.

U.S. stock futures also moved marginally lower as of 10:00 a.m. in Hong Kong. Dow Jones Industrial Average futures dipped 0.05%, S&P 500 futures fell 0.04%. Nasdaq Futures fell 0.09%.

Coinbase has its own legal battle with the SEC. In March, the SEC alleged Coinbase violated investor protection laws and threatened enforcement action against the exchange. Coinbase argued back in April that the SEC’s move appeared to be undermining its own role as the monitor of companies registering to sell shares to the public.

Coinbase has also requested a court to compel the SEC to publicly respond to the exchange’s July 2022 petition asking for clearer crypto regulation guidelines.

On the regulation front, Paul Grewal, chief legal officer of Coinbase, tweeted on Monday that he will testify on Tuesday before the House Committee on Agriculture on the need for clear crypto rules and on the Digital Asset Market Structure discussion draft released Friday.

“The US is falling behind,” Grewal tweeted. “We cannot afford to ignore crypto while other markets take advantage of our absence, developing rules and regulations that enable the industry to thrive and risk sending jobs, investment, and technological leadership overseas.”

(Updates with equity section.)