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SEC Attack on Crypto has Led to Bitcoin Forks Flourishing, But What About other Altcoins?

Published July 4, 2023 4:42 PM
Omar Elorfaly
Published July 4, 2023 4:42 PM

Key Takeaways

  • Crypto exchanges thrive despite SEC attacks
  • SEC ‘securities’ stance positions Bitcoin and its forks above all 
  • Altcoins are getting systematically erased

Gary Gensler’s leadership of the US Securities and Exchange Commission has been nothing short of eventful. The regulating body has found itself on the offensive against key crypto stakeholders. 

The SEC has, so far, filed thirteen lawsuits against Binance, the world’s biggest exchange, for a number of reasons, including trading in “unregistered securities”.

Coinbase, the biggest US-based exchange is also facing a securities-based lawsuit. Moreover, the SEC is working on taking down any exchange that attempts to trade in anything other than Bitcoin and its forks.

For example, Ripple, a US-based exchange, has been dealing with an SEC lawsuit for over two years now for trading XRP, which, to no one’s surprise, the SEC sees as an “unregistered security”.

The SEC’s flurry of legal attacks hasn’t just influenced the operations of exchanges on the receiving end. Now, global exchanges such as Revolut are suspending the trade of any altcoin that may cause the wrath of the SEC.

But here’s the catch: while altcoins are being treated as the SEC’s punching bag, the process left the market clear on what crypto tokens actually have a potential future.

Bitcoin, Bitcoin, Bitcoin

Years before becoming SEC Chair, Gary Gensler told an interviewer that he didn’t see Bitcoin, LiteCoin, Bitcoin Cash, or Ethereum as securities. This rule he carried over to his leadership of the SEC has since been used as a guideline to strike down the potential for any other token.

Ever since, those who seek to trade and profit from crypto trading have found refuge in the safest option, Bitcoin. 

Starting with Binance, whose founder may even face federal charges. Despite having some of its key features shut down, such as transacting using the US dollar, the company has still integrated the Bitcoin Lightning Network to allow for faster Bitcoin trades on its platform.

Coinbase has also found a way to tie its future to Bitcoin. The exchange has intelligently tied itself to the biggest investor in the industry, BlackRock. The world’s biggest asset management company refiled for its Bitcoin spot ETF using Coinbase as its surveillance partner

Three of the nation’s largest financial institutions, Fidelity, Charles Schwab, and Citadel Security have even backed the launch of EDX Markets, a new exchange that will only allow the trade of Gensler-approved tokens. 

Lastly, BlackRock’s ETF application caused a tsunami of ETF applications to follow, including applications filed by Fidelity, Ark Investment, and Valkyrie.

Where Does That Leave Other Tokens?

Well, one can just look at ADA, SOL, and MATIC for an answer to that question. These three tokens have been the victims of the SEC’s crusade, finding themselves ostracized from the whole market. 

Their descent started with eToro, a major international exchange that announced the suspension of trading in these coins. The announcement was followed by similar ones by Bakkt, Revolut, and Robinhood. 

Naturally, ADA, SOL, and MATIC have since been on a slippery slope price-wise. SOL has seen a 50% drop  in price in the past year. The same goes for ADA. And, MATIC has seen the same drop  in just the past four months. 

Some may see the rise of Bitcoin coinciding with the lawsuits mentioned above as a coincidence, others may see it as a manifestation of Gensler’s exact plan.