How much capital have the lawsuits sucked out of the market?

Two lawsuits from the US Securities and Exchange Commission (SEC) caused an uproar in the crypto market last week. The authority sued Binance and Coinbase, the two largest crypto exchanges of all. As a result, the market corrected significantly downwards. According to the SEC, at least five of the ten largest cryptocurrencies are classified as securities. Because the exchanges trade these coins, they therefore violate US federal law, the agency argues. A reaction from investors was not long in coming. A look at the market caps of the top coins shows how much money has really flowed out of the sector over the past week and where investments are headed.

Top 3 coins spared so far

With the recent lawsuits against Binance and Coinbase, the SEC now classifies at least 68 cryptocurrencies as securities. Ripple has been in a legal dispute with the authority over the categorization of the XRP token since 2020. The TRON coin followed in March this year in the course of a legal action against Justin Sun.

The big blow came last week. Cardano, Polygon, Solana and the in-house Binance Coins BNB and BUSD were also caught with the lawsuits against Binance and Coinbase. A dozen other tokens are also affected. Prices collapsed collectively. A jolt went through the market at the weekend. But how much money has really been sucked out of the crypto sector?

Loud Data by CoinGecko, the entire crypto market reached a capitalization of $1.198 trillion on June 4th (before the lawsuits). As of today, June 12, the total market cap is $1.098 trillion. The measures taken by the stock exchange regulator cost the industry $100 billion. Tokens that are not on the SEC’s hit list were able to cushion the price drop much better.

Big outflow from US stock markets

In addition to losses in total market capitalization, significant capital movements away from the USA can be observed. According to a report by Blockchain analysts CryptoQuant, which the news portal Cryptopotato is present, the United States is sharply losing market dominance. Due to unclear crypto regulations, more than half of the Bitcoin (BTC) that crypto firms hold for their customers have migrated to offshore and international exchanges. The US share has thus fallen to the level of 2017. The report also collects similar values ​​for Ethereum. About 56 percent of ETH on crypto exchanges is held outside the United States.

While the USA continues to take a hard line against the sector, other economic zones are signaling a fundamental opening with the development of clear regulations. In this regard, the MiCA regulation was only recently passed in the euro zone. Hong Kong is also crypto-friendly. A representative of Hong Kong’s financial regulators invited US crypto exchange Coinbase on June 10 to come to the country and register as a recognized trading platform.