The US Securities and Exchange Commission (SEC) has dealt a heavy blow to the crypto industry by suing Binance and Coinbase, two of the largest crypto platforms, for violating securities laws. Among the 13 tokens targeted by the SEC is MATIC, the native token of Polygon, a layer-2 scaling solution for Ethereum.
MATIC suffered a massive 31% drop in a week after the SEC filing, reaching a new low of $0.6. However, it has shown some signs of recovery, bouncing back by 11% in the last day.
Polygon Labs, the developer of MATIC, defended its network on Twitter, stating that it is not subject to US jurisdiction as it was created and deployed outside the US and caters to a global community.
The SEC’s lawsuit against Binance and Coinbase follows its previous actions against other crypto firms, such as Kraken, which was fined $30 million for offering an unregistered staking service. The SEC claims that the tokens involved in these services are investment contracts and therefore securities under the Howey Test.
The market reaction to the SEC’s crackdown has been negative, with most cryptocurrencies losing value in the past week. Bitcoin gained some dominance as investors fled to safer assets. The other tokens in the SEC’s list are SOL, ADA, FIL, ATOM, SAND, MANA, ALGO, and COTI.
MATIC bulls are trying to hold the $0.6 support level, which could be a springboard for future growth. However, the token’s price is still influenced by external factors and regulatory uncertainty. If MATIC fails to maintain this support level, it could face further losses. On the other hand, if MATIC can overcome this hurdle, it could aim for the $0.83 resistance level in the medium to long term.
Warning: Investing in cryptocurrencies involves a high degree of risk and volatility. Cryptocurrencies are subject to market fluctuations, technical issues, hacking, regulatory uncertainty, and legal challenges. Investors should be prepared to lose all or part of their investment and should not invest more than they can afford to lose.