Bitcoin and Ethereum Continue Tumble in Wake of ICO Crackdown
After the cryptocurrency crash that hit late last week, the Bitcoin market stabilized for a while. But not for long — on Monday, it plummeted again, taking the value of one bitcoin as low as $5,173.
This is the sort of level where Bitcoin was at back in October last year, when it was on its way to its brief peak just below $20,000. As usual, it is not entirely clear why the latest tumble occurred. However, Friday saw actions by the U.S. Securities and Exchange Commission (SEC) that could have something to do with it.
The SEC announced settlements with two cryptocurrency startups that were running initial coin offerings, or ICOs. Airfox and Paragon Coin agreed to pay civil penalties for running token sales last year without registering them as securities offerings.
These were the first such penalties levied by the SEC and, as SEC Enforcement Division co-director Stephanie Avakian said: “These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets.”
The SEC is also, per a Wall Street Journal article from last Thursday, investigating the involvement of ShapeShift CEO Erik Voorhees in the ICO run by cryptocurrency-backed loans provider Salt.
Cryptocurrency scenesters told CoinDesk that the SEC’s activity suggested ICO projects were in serious trouble, and the fundraising method should be abandoned.
At the time of writing on Monday morning, the value of one bitcoin had recovered to around $5,350, though it was still down 4.25% over the last 24 hours.
Most other big cryptocurrencies were also suffering. XRP’s fall was roughly in line with Bitcoin’s, but Ethereum — which is strongly tied in with the ICO scene — was down 9.3%.