Benzinga - In the aftermath of the Securities and Exchange Commission's (SEC) lawsuit against Binance and its founder Changpeng Zhao, the cryptocurrency market experienced a significant downturn, with Bitcoin (CRYPTO: BTC) recording a drop of approximately 4%, Ethereum (CRYPTO: ETH) declining by about 4.5%, and Binance's token, BNB (CRYPTO: BNB), suffering an 8% dip within the first hour after the court filing.
According to CoinMarketCap, the overall market capitalization for cryptocurrencies also decreased by around 4.5% during this period.
Although there were slight price recoveries observed at the time of publication, with Bitcoin hovering around $25,800 after briefly dipping below $25,500, the impact of the SEC's lawsuit highlighted the substantial influence of Binance.
Despite performing more than 10 times the trading volume of Coinbase Global Inc (NASDAQ: COIN) in the past 24 hours, Binance witnessed $69 million in trading outflow following the news of the lawsuit.
In contrast, shares of Coinbase, the largest U.S. exchange, experienced double-digit declines.
The stock price initially dropped nearly 12% from its Friday close but has since recovered slightly, currently showing a 10.3% decrease at $57.91.
This is not the first legal challenge faced by Binance, as the Commodity Futures and Trading Commission (CFTC) previously sued the exchange and Zhao in March for allegedly violating CFTC rules.
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Similar to the recent SEC lawsuit, the announcement of the CFTC case also triggered price drops for several top cryptocurrencies.
In the SEC's lawsuit against Binance, the regulatory agency asserted that certain prominent cryptocurrencies, including Solana (CRYPTO: SOL), BNB, Polygon's native token (CRYPTO: MATIC), and Cardano's ((CRYPTO: ADA) native token, are securities.
This classification has significant implications for the crypto industry as it may discourage brokers from offering these tokens, potentially impacting their liquidity and price.
The lawsuit notably expands the SEC's list of alleged securities to include Filecoin (CRYPTO: FIL), The Sandbox (CRYPTO: SAND), Decentraland (CRYPTO: MANA), and Algorand (CRYPTO: ALGO).
On a different note, DYDX (CRYPTO: DYDX), the governance token for the decentralized exchange platform of the same name, witnessed a surge to $2.23 in response to the SEC's lawsuit, representing an approximately 10% gain from its lowest price of $2.04 within the past 60 minutes, according to CryptoWatch.
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