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Illustration by Mitchell Prefer for Decrypt.

Crypto markets took a nosedive this week on news that the US Securities and Exchange Commission has launched enforcement action against Binance. On Mondayfollowed by Coinbase: the next day, both were sued for allegedly operating as an unregistered stock exchange. The pair are the two largest crypto exchanges in the world, and the entire industry took notice.

Market leaders Bitcoin (BTC) and Ethereum (ETH) had weaker losses among the leading coins. Bitcoin has lost nearly 6% in seven days, trading at $25,624 on Saturday. Ethereum has fallen 8.5% over the same period and is currently changing hands at around $1,738.

Binance’s native BNB coin crashed 23% to $236 in a week.

Cardano (ADA), Solana (SOL) and Polygon (MATIC) holders lost more than 30%. These three cryptocurrencies were all listed as securities SEC lawsuit against Binance.

Leading cryptocurrencies that lost 20% to 30% of their value this week include Litecoin (LTC), Avalanche (AVAX), Shiba Inu (SHIB), Uniswap (UNI), Chainlink (LINK), and Cosmus Hub ( ATOM).

Every unsecured cryptocurrency in the top 30 by market capitalization has lost value this week.

Crypto giants are under fire

Binance immediately responded to the SEC’s lawsuit, calling the regulator “unreasonable” and claiming that it was “disappointed” by the agency’s use of “.blunt weapons of enforcement“.

The reaction of the entire market followed that day by falling sharply 3.6% overnight and, on a cautionary note, Coinbase’s stock price also fell on news of Binance’s woes and continued to fall when Coinbase’s lawsuit hit the press the next day.

Later on Tuesday, SEC Chairman Gary Gensler said that the entire business model of the crypto industry “built on inconsistency” and cursing CNBC: “We don’t need more digital currency.”

A multi-state working group consisting of: California, Illinois, Kentucky, Maryland, New JerseyAlong with South Carolina, Vermont, Washington, Wisconsin Alabama together charged against Coinbase that same day for violating securities laws through its betting service, echoing one of the SEC’s charges against the exchange.

Paul Grewal, Coinbase’s general counsel, was in Washington to speak at a hearing on the Digital Asset Market Structure Debate when news of the enforcement broke. He briefly deviated from his prepared remarks and called the lawsuit “disappointing but not surprising” and said Coinbase would continue to “ordinary business“.

He also accused the agency of “relying on an enforcement-only approach” and called on Congress to pass a bill that would establish a regulatory framework around cryptocurrency transactions.

Tuesday was a remarkably busy day at the SEC. In addition to Coinbase’s lawsuit and Gensler’s CNBC appearance, the top US securities regulator also filed: urgent movement requesting permission from the court that day freeze Binance.US assets.

The U.S. Court of Appeals for the Third Circuit had to appreciate the urgency this week, as it finally responded on Wednesday to a public petition filed by Coinbase with the SEC in July asking it to clarify its rules on which digital assets are securities. suggestions. The court It gave the SEC seven days clarify his position.

The same day, the SEC filed court documents alleging that billions of dollars in Binance-related funds have flowed regularly through Signature Bank and Silvergate Bank for years. The regulator further alleges that Binance entities pooled funds and transferred them to an affiliate of Paxos, an entity controlled by Merit Peak, controlled by Changpeng Zhao, described as a trading desk and proprietary trader of digital assets.

Also that day, Binance.US pulled over forty trading pairs, most of them, including Tether’s dollar-pegged stablecoin USDT, which has previously been the subject of scrutiny for the nature of the assets backing it. On Friday, the exchange went “crypto onlyoperations by suspending US dollar deposits and withdrawals.

But the plot really tightened up when it was revealed that archenemies Gary Gensler and Changpeng Zhao have a story.

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