Solana and ICP Outperform Bitcoin by Over 49% Since SEC Lawsuits

With Bitcoin down approximately 20% from its year-to-date high, it is often helpful to zoom out and examine the broader market picture. I have a saved chart tracking all tokens listed in the Coinbase and Binance lawsuits filed on June 6 and June 5, 2023, respectively, along with their prices denominated in Bitcoin.

For context, both Binance and Coinbase are currently defending their positions in U.S. courts. The central issue in both lawsuits is whether the crypto assets offered by these exchanges should be classified as securities, thereby falling under SEC regulation.

The tokens identified as potential securities in the aforementioned lawsuits include Algorand, Solana, Cardano, Near, Filecoin, and others, as shown in the chart below. Let’s examine how these assets have performed compared to Bitcoin over the past eight months and then look at the performance of some standout tokens in dollar terms.

Solana and ICP saw increases in their price in BTC terms, rising 116% and 9% respectively. All other tokens listed as potential securities declined against Bitcoin by between -41% and -80%.

The best performer was Cardano, which lost 41% of its value against Bitcoin; the worst was Chilliz, which declined by 80%. In dollar terms, Cardano is up 50%, while Chilliz is down 53%, showcasing the strength of Bitcoin over the past 15 months.

Performance since Coinbase and Binance SEC lawsuits

When Binance and Coinbase were hit with SEC lawsuits within a day of each other last June, the market reeled from the impact of the two most prominent names in crypto exchanges being so directly targeted. On June 5, when Binance was served, Bitcoin fell to $25,300 from around $26,800. However, on the day Coinbase was served, it regained its value before slowly declining to around $25,000 midway through the month.

All other tokens threatened with categorization as a security fell against Bitcoin within the timeframe, with Dash being the worst performer at -56%, and Cardano being the least affected at -15%.

Notably, against the dollar, Solana, ICP, and Near are up 286%, 265%, and 145% respectively over the same timeframe. Moreover, even the biggest loser against Bitcoin, Dash, is up 4%, and Cardano is up 87% against the dollar.

When you price everything in dollars in crypto, you can miss that your assets have declined in Bitcoin terms.

Binance and Coinbase defend their positions in court

Although most of the industry has been focused on ETFs this year, Binance’s case was heard on January 22 in a Washington courtroom, with Judge Amy Berman Jackson of the District of Columbia presiding. Coinbase appeared in a New York court on January 17, with Judge Katherine Polk Failla overseeing the proceedings.

The SEC’s argument against Binance focused on Binance’s BUSD stablecoin and BNB token, suggesting that at least the BNB token might have initially been sold as an investment contract. Binance’s defense challenged the applicability of the Howey test to cryptocurrencies and disputed the SEC’s comparisons to other court cases, such as Zakinov v. Ripple Labs.

Coinbase also contested the relevance of the Howey test for cryptocurrencies. The SEC’s broad approach raised concerns about extending the definition of securities to encompass categories typically outside its purview, such as collectibles. Judge Failla acknowledged the complexity of the issue and deferred her decision.

Elliott Stein, a senior litigation analyst at Bloomberg, assessed a 70% likelihood of the SEC’s June 2023 lawsuit against Coinbase being dismissed. However, a victory for the SEC in either case could have significant implications for the cryptocurrency industry. It could mandate crypto exchanges to treat digital tokens as securities, fundamentally altering how these assets are handled and regulated in the U.S.