Despite Bitcoin experiencing a 20% decline from its year-to-date high, it is important to gain a broader perspective on its performance and compare it to the tokens listed in the Coinbase and Binance lawsuits. Both exchanges are currently entangled in legal battles in the United States, with the focus being on whether the crypto assets they offer should be classified as securities and fall under SEC regulation. The tokens involved in these lawsuits include Alogrand, Solana, Cardano, Near, Filecoin, and others. Let’s analyze how these assets have performed against Bitcoin over the past eight months and also consider their performance in dollar terms.
Performance Since FTX’s Bankruptcy Filing
To understand the context, let’s begin by looking at the performance of these digital assets since the black swan event of FTX’s bankruptcy filing. On November 11, 2023, when Bitcoin was priced around $16,900, FTX filed for Chapter 11 bankruptcy. Since then, Bitcoin has surged by approximately 140% against the dollar, with only two assets managing to outperform it. Solana and ICP experienced price increases in Bitcoin terms, rising by 116% and 9% respectively. However, the remaining tokens listed as potential securities witnessed declines between -41% and -80%. Cardano performed the best, losing only 41% of its value against Bitcoin, while Chilliz experienced the worst decline of -80%. In dollar terms, Cardano is up 50%, while Chilliz is down by -53%, highlighting Bitcoin’s strength over the past 15 months.
The cryptocurrency market faced significant turmoil when Binance and Coinbase were hit with SEC lawsuits within a day of each other in June of the preceding year. On June 5, Bitcoin fell to $25,300 from around $26,800 when Binance was served with the lawsuit. Interestingly, on the day Coinbase was served, Bitcoin regained its value before gradually losing ground and settling around $25,000. A notable event occurred on June 20, 2023, when BlackRock applied for a spot in Bitcoin ETFs. This resulted in Bitcoin’s price rising to over $30,000 until a stock market sell-off in August halted the gains. Bitcoin then traded sideways until Grayscale’s victory in court against the SEC, which triggered a surge towards its eventual two-year high of $49,000 on the day spot Bitcoin ETFs were launched. At its peak, Bitcoin was up 90% since the Coinbase and Binance lawsuits. Currently, Bitcoin has retraced somewhat but remains up 47% since the lawsuits. However, three assets have performed better than Bitcoin during this period – Solana and ICP with gains of 169% and 49% respectively, and Near Protocol with an 8% increase. On the other hand, all other tokens in danger of being categorized as securities declined against Bitcoin, with Dash experiencing the largest decline of -56% and Cardano being the least affected with a -15% drop. Interestingly, in dollar terms, Solana, ICP, and Near are up by 286%, 265%, and 145% respectively, over the same time period. Even Dash, which suffered the most against Bitcoin, is up by 4% when priced in dollars, and Cardano recorded an 87% increase.
While most of the industry’s attention has been focused on ETFs, the SEC lawsuits against Binance and Coinbase took center stage in January. Binance’s case was heard on January 22 in a Washington courtroom, with Judge Amy Berman Jackson overseeing the proceedings. Coinbase appeared in a New York court on January 17, under the supervision of Judge Katherine Polk Failla. The SEC argued against Binance, primarily targeting its BUSD stablecoin and BNB token. The SEC claimed that the BNB token may have initially been sold as an investment contract. Binance’s defense challenged the applicability of the Howey test to cryptocurrencies, questioning the SEC’s comparisons to previous court cases, such as Zakinov v. Ripple Labs. Coinbase also disputed the relevance of the Howey test for cryptocurrencies. The SEC’s broad approach raised concerns about expanding the definition of securities to include categories that are typically outside its purview, such as collectibles. Judge Failla acknowledged the complexity of the issue and deferred her decision. Elliott Stein, a senior litigation analyst at Bloomberg, assessed a 70% likelihood of the SEC’s lawsuit against Coinbase being dismissed. However, a victory for the SEC in either case could have significant implications for the cryptocurrency industry, potentially resulting in crypto exchanges having to treat digital tokens as securities. This would fundamentally alter how these assets are handled and regulated in the United States. The outcomes of these cases will establish important precedents for the future regulation of digital assets in the country and are likely to have a tangible impact on the tokens mentioned in the Coinbase and Binance lawsuits.
While Bitcoin has experienced recent fluctuations, it is essential to assess its performance against the tokens involved in the Coinbase and Binance lawsuits. By examining both Bitcoin’s performance compared to these tokens and their performance in dollar terms, we can gain a deeper understanding of the market dynamics. The ongoing SEC lawsuits against these exchanges further add complexity to the situation, as the legal outcomes will shape the regulatory environment for the cryptocurrency industry moving forward.
