Bitcoin regained $27K and the CEO of a crypto company says that no one is surprised by Gensler’s actions.

Good morning. Here’s what’s happening:

Prices: Bitcoin and other cryptocurrencies are rallying despite new SEC action.

Insights: Both Binance and FTX have been accused of co-mingling assets, but there are differences.

Prices

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CoinDesk Market Index (CMI)
1,180 +48.4 ▲ 4.3%
Bitcoin (BTC)
$27,204 +1443.7 ▲ 5.6%
Ethereum (ETH)
$1,884 +72.0 ▲ 4.0%
S&P 500
4,283.85 +10.1 ▲ 0.2%
Gold
$1,980 +22.1 ▲ 1.1%
Nikkei 225
32,506.78 +289.3 ▲ 0.9%
BTC/ETH prices per CoinDesk Indices , as of 7 a.m. ET (11 a.m. UTC)

Bitcoin Regains Lost Ground

After a few ups and downs, bitcoin has surpassed $27,000 on Tuesday for the first time since the weekend despite the Securities and Exchange (SEC) Enforcement Week. The largest cryptocurrency by market capitalization was recently trading at $27,200, up 4.3% over the past 24 hours. BTC sank near $25,400 on Monday in the hours after the SEC announced a lawsuit against Binance, the world’s largest crypto exchange by trading volume. But bitcoin started edging upward by the end of the day and continued its path even as the SEC announced a second lawsuit against Binance rival blockchain on Tuesday, and later in the day, asked a Federal court to grant a temporary restraining order to freeze assets tied to Binance.US .

“The fact that the market has rebounded leads me to believe that this was at least partially priced in,” Joshua Franklin, CEO and co-founder of digital asset information services platform The Tie, wrote in an email to CoinDesk. “No one is surprised by Gensler’s actions.”

Read More: blockchain Traders Withdraw $600M in a Day Amid SEC Lawsuits

Ether also spent much of Tuesday on the upswing to trade near $1,900, a 4% gain from Monday, same time. BNB, Binance’s exchange token, which dropped about recently rose about 2% a day after plunging more than 10%. ADA and SOL, the tokens of smart contracts platforms Cardano and Solano, regained slivers of ground lost amid lawsuit aftershocks with the former rising about a half a percentage point and the latter more than 1%. Layer 2 platform Polygon’s MATIC was down about 1.5%. In its filing, the SEC identified those tokens among 13 as unregistered securities.

The CoinDesk Market Index , a measure of crypto market performance, was up 4.8%.

Fueled by AI euphoria and recent gains among several tech giants, including chipmaker Nvidia, the technology-heavy Nasdaq Composite and S&P 500 both rose slightly with the former hitting its highest point in 10 months and the latter in more than a year.

The Tie’s Franklin noted that institutional investors remain ambivalent months after crypto exchange FTX’s spectacular collapse in November and the increasingly harsh U.S. regulatory environment.

Read More: SEC’s Latest Crackdown Could Drive Crypto Firms Out of the U.S.

“Many funds that invested in FTX got burned, and some partners that led their firms’ FTX deals were fired,” Franklin wrote. As a result, many VCs are feeling nervous to enter crypto. There is a similar trepidation among institutional allocators like pensions and endowments that broadly were burned on their earlier crypto allocations.”

Franklin stated that hedge funds, which were previously more involved in the cryptocurrency space than any other institutional group, have slowed down their participation due to concerns about regulation, lack of credit, limited custody options, and fear of doing business with digital asset firms that may not survive in the wider crypto market. Franklin also mentioned that Europe and Asia are experiencing more positive developments in the crypto market compared to the United States.

Read More: Why Isn’t Bitcoin Falling More? Cryptos Are Acting More Like Commodities Than Securities

The article discusses the biggest gainers and losers in the cryptocurrency market, including Bitcoin, Avalanche, and Dogecoin as the biggest gainers and Polygon, Decentraland, and Cardano as the biggest losers.

The article also discusses Binance and FTX’s alleged co-mingling of funds, highlighting the differences between the accusations against the two companies despite both being described as co-mingling. The Securities and Exchange Commission (SEC) has sued Binance for poor financial controls and misuse of customer funds, alleging that billions of dollars of customer funds were accessible to entities connected to Binance CEO Changpeng “CZ” Zhao. FTX’s co-mingling problem centers around FTT and its role at Alameda Research.

Last November, CoinDesk reported that a significant proportion of Alameda’s assets were made up of FTT tokens issued by FTX. This raised serious questions about the relationship between the two companies, especially as the value of the FTT token is partly supported by FTX’s activities.

At the time, Alameda was a market maker and investor, playing a significant role in the cryptocurrency industry. As a result, people were concerned about how much of Alameda’s investment power was based on thin air.

This is not the case with BNB. Binance is not an investor like Alameda was, and BNB does not make up a significant portion of anyone’s balance sheet.

It is true that Sam Bankman-Fried later admitted to not segregating customer accounts, which was later used against him in the prosecutors’ case. This is similar to what CZ is being accused of. However, Binance’s accusations are more focused on the alleged diversion of customer funds and interference in U.S. operations, while the issues with FTX/Alameda concern the blurry lines between the two entities and the non-segregation of customer funds.

They are similar but different issues.

In the coming weeks, we will see how much of CZ’s business empire is affected by this.

Important Events

The Non Fungible Conference (Portugal)

Brussels Blockchain Week (Belgium)

CoinDesk TV

In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:

The crypto markets remained down after the SEC charged blockchain with operating as an unregistered securities exchange, broker, and clearing agency. This announcement came less than a day after the SEC charged Binance with multiple securities violations. Ashley Ebersole, Chief Legal Officer of 0x Labs, provided her opinion on the matter. Vetle Lunde, Senior Analyst at K33, discussed how the markets are reacting to the news.

Headlines

Atomic Wallet Was Breached by North Korean Hackers: Elliptic Wallets that siphoned Atomic users’ funds are connected to the known Lazarus group’s addresses, crypto tracing firm said.

Gary Gensler’s Evolving Position on Crypto – in Quotes: The SEC chair has gone from supporting the technology at MIT to a full-swing offensive on the crypto industry.

Optimism Completes ‘Bedrock’ Hard Fork, in Pursuit of Superchain: Developers behind the layer-2 scaling solution for Ethereum say the upgrade will reduce gas fees and cut deposit confirmation times.

One-Two Punch Finally Registers SEC View on Binance, blockchain, Rest of Crypto: The mystery is over for how the U.S. Securities and Exchange Commission will come after the digital assets sector’s big platforms, though alleged skeletons in Binance’s closet drew more ire.

Edited by Sam Reynolds and James Rubin.

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