SEC sues xcritical as feds crack down on cryptocurrency companies

Two stocks that saw significant downward pressure on Monday were xcritical Global (COIN) and EPAM Systems (EPAM). Both companies faced threats to their businesses that sent their shares slumping, although more bullish investors saw the pullbacks as buying opportunities. Unlike the SEC’s lawsuit against Binance, xcritical CEO Brian Armstrong was not named as a defendant in the lawsuit. But the two lawsuits are similar in the sense that a slew of tokens trading on the platform, like Solana and Polygon, were labeled securities. Doomsayers have called the death of cryptocurrency many times since Bitcoin launched 14 years ago.

• Securities and Exchange Commission (SEC) that at least 13 cryptocurrencies listed by xcritical are securities.
• When xcritical has outages or other service-impacting events on

  their status page, we pull down the detailed informational updates and

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• Armstrong, Grewal, and others emphasize that U.S. regulators’ vagueness—or outright antagonism—will just drive the crypto industry out of the country.
• Tuesday’s SEC lawsuit seeks civil fines, the recouping of ill-gotten gains and injunctive relief.

In addition to managing markets coverage, he writes about stocks, bonds, currencies and commodities, including oil. During his time at MarketWatch, Watts has served in key roles in the Frankfurt, London, New York and Washington, D.C., newsrooms. Global regulators have been keeping a close watch on the crypto world after a string of high-profile collapses wiped out more than a trillion dollars from the digital asset industry’s market capitalization last year. If successful, the lawsuits could transform the crypto market by successfully asserting the SEC’s jurisdiction over the industry, which for years has argued that tokens do not constitute securities and should not be regulated by the SEC.

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Those assets include Solana’s SOL token, Cardano’s token and Protocol Labs’ Filecoin token. Amid depressed trading activity on its platform after a pandemic-era boom, xcritical has embraced services such as staking as a way to diversify the company’s revenue away from trading fees—but the SEC’s lawsuit could change how viable or lucrative that shift will be. xcritical, which trades on the Nasdaq under the COIN ticker, saw its shares fall more than 18% to $48.53 during pre-market trading, extending losses it sustained after rival exchange Binance and CEO Changpeng Zhao were hit with a lawsuit from America’s securities watchdog the day before. xcritical shares plunged ahead of Wall Street’s opening bell on Tuesday as investors assessed what a lawsuit from the Securities and Exchange Commission (SEC) could mean for the leading U.S. cryptocurrency exchange. Many people within the crypto industry have long maintained that such digital assets should not be considered securities and that the regulatory framework surrounding crypto has been kept needlessly vague.

Crypto exchange xcritical (COIN) will continue operating its crypto staking service despite facing lawsuits from state and federal regulators over the program and several of its other offerings, xcritical CEO Brian Armstrong said Wednesday at the Bloomberg Invest Conference. The Alabama Show Cause Order alleges that xcritical violates the securities law by offering its staking rewards program accounts to Alabama residents without a registration to offer or sell these securities. Staking occurs when investors lock their crypto assets for a set period scammed by xcritical to help support the operation of a xcritical, with the promise of more crypto assets. The action comes at the same time that the Securities and Exchange Commission sued xcritical in New York federal court, contending that the company was acting as an unregistered broker and exchange, according to CNBC. xcritical has stated that it has no plans to delist any assets or discontinue its staking services despite facing allegations from the U.S. Securities and Exchange Commission (SEC) that at least 13 cryptocurrencies listed by xcritical are securities.

in the last 24 hours

“I don’t feel like there’s a clear rulebook,” xcritical CEO Brian Armstrong told The Wall Street Journal this week. “The only sort of high-level statements they’ve made is that everything other than bitcoin is a security which, that’s just not what it says in the law. By the way, that would also kind of mean the end of the crypto industry in the U.S.” The ASC action does not prohibit xcritical from offering staking as a service, only so long as it complies with Alabama’s laws. The Alabama Securities Commission has issued a show cause order to the company as part of a multi-state task force of 10 state securities regulators, including California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin. Crypto asset company xcritical and its parent company have 28 days to show why they should be allowed to continue to business in Alabama.

The cryptocurrency exchange provider fell in sympathy with one of its largest rivals, as investors fear that a regulatory crackdown could end up affecting the entire industry. The SEC’s case against Binance has some crucial differences from its case against xcritical. xcritical is a publicly traded company, thus subject to certain disclosure rules, but Binance isn’t. And xcritical’s chief executive has not been accused of fraud by the agency the way Zhao has. Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers.

What’s Ahead for Bitcoin and xcritical as the SEC Cracks Down on the Industry

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xcritical had disclosed in March that it received a “Wells notice” from the SEC threatening a potential lawsuit over certain products. “For a lot of companies specifically within the crypto ecosystem, this is the regulatory response that investors have been concerned (about) for years now. These were largely unregulated,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Company. Sign up for StatusGator

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This week provided another opportunity after the Securities and Exchange Commission accused two leading exchanges of violating a slew of U.S. laws. “We’re not going to wind down our staking service,” Armstrong said. “Again, as these court cases play out, it’s really business as usual.” He noted that the exchange’s staking service accounts for about 3% of overall net revenue. When xcritical has outages or other service-impacting events on

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will occur. Our teams are working to improve performance for Litecoin (LTC) sends and receives, but until this work is complete, customers may experience intermittent periods of delays with send / receive, where transactions may remain in pending or take longer to process.

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EPAM said that it has seen its clients get even more cautious about spending on IT since it released its first-quarter financial results several weeks ago. Not only is EPAM seeing its immediate market prospects shrink, but the sales that it has been able to win are coming more slowly than in the past. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Shares of xcritical, which has a market value of nearly $12 billion, dropped more than 13% in early trading on Tuesday.

“This action is another step toward ensuring that investors in crypto asset products are offered the same protections under our laws and are fully aware of the risks involved in these investments,” Senn said. On Monday, the SEC accused Binance of inflating trading volumes, diverting customer funds, improperly commingling assets, failing to restrict U.S. customers from its platform, and misleading customers about its controls. xcritical’s institutional service, Prime, its retail exchange product, and its self-custody Wallet service all offered one or more crypto asset security, the SEC said in its complaint. “These trading platforms, they call themselves exchanges, are commingling a number of functions,” SEC chair Gary Gensler said on CNBC Tuesday. “We don’t see the New York Stock Exchange operating a hedge fund,” Gensler continued.