Bitcoin fell slightly this morning to below the $37,300 level, as well as Ethereum, which is still trading at the $2008 level after touching the $2068 level yesterday.
It appears that the markets may suffer from the return of negative sentiment in light of the return of regulatory concerns to the fore and renewed fears of another possible turmoil in the market. That was with the lawsuit filed by the SEC yesterday against the third largest crypto exchange, Kraken.
While the SEC brought a number of charges against the crypto giant regarding its unregistered work as an exchange, broker, dealer, and clearing agency, in addition to charges of comingling investors’ funds with the company’s own funds.
The SEC also said that this unlicensed business deprived investors’ funds of the necessary protection. This, in turn, prompted the Authority to file charges against the exchange related to failure to carry out internal control and record-keeping as required.
In the aftermath, the head of the authority’s law enforcement division said that the exchange had preferred to make hundreds of millions of dollars rather than comply with the laws.
This lawsuit call brings to mind the lawsuits that Coinbase and Binance faced, in addition to the collapse of FTX and the lawsuits that it subsequently faced. These events, although different in some details, once again awaken fears about renewed widespread collapses that may occur in the market in the event of a renewed outbreak of panic among participants.
However, I believe that the giants of companies operating in this sector have already learned how to survive and maintain the necessary reserves to face any sudden withdrawals or panic outbreaks in such circumstances, and this may prevent such collapses from occurring on a large scale. This is what it looks like. So far.
In contrast, Kraken defended itself by saying that the authority did not report any fraud, manipulation, or loss of customer funds as a result of a cyber breach.
The exchange also stated that the authority did not indicate a failure to maintain sufficient reserves and that it could not prove the loss of any client funds. Kraken appears to be seeking to allay any potential concerns among its customers as well as defend itself.
This lawsuit against one of the largest cryptocurrency companies has also prompted Congress, Cynthia Lummis, to renew the call to pass the legal framework that regulates this market, which clearly defines for the SEC what are securities and what are commodities, and this would stimulate more innovation. in the United States.
This is true, of course, and I believe that the continued regulatory concerns and the lack of a clear legal and legislative environment may remain an obstacle to the development of this sector and prevent further adoption of this technology, in addition to weakening investors’ appetite to enter this very turbulent market until now.
