Bitcoin Retreats; Justin Sun-Linked Coins Fall After SEC Charges

by James · March 22, 2023

(Bloomberg) — Bitcoin retreated from its highest price level since June and minor cryptocurrencies fell after the Federal Reserve’s interest rate hike eased speculation that looser monetary policy would spur demand for the digital asset.

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Other tokens linked to crypto-founder Justin Sun fell sharply after the US Securities and Exchange Commission accused him and three of his companies of offering and selling unregistered securities, as well as price manipulation. TRX, the token linked to the Tron network that Sun started, fell 10% in the last hour, according to tracker CoinMarketCap. The price of BTT, a token associated with BitTorrent, fell by more than 1%.

Bitcoin fell 5% to $26,753 as of 4pm in New York, after climbing as high as $28,913 earlier. The cryptocurrency flirted with breaking $29,000 for the first time since June. Bitcoin has risen around 60% this year. This comes on the back of last year’s decline of 64%.

“Wow, the market is reacting wildly to the recent surge,” said Kevin March, founder of crypto prime brokerage platform Floating Point Group. There was a “large volatility and volume increase as investors realize there is nothing stopping the Fed from continuing to raise interest rates if the affected mid-sized lenders are going to continue to be bailed out.”

Crypto prices have risen again in recent weeks amid turmoil in the US and European financial sectors, which saw the collapse of three US banks and led to the takeover of Credit Suisse Group AG by UBS Group AG over the weekend. Proponents of digital assets say their industry is benefiting as investors realize tokens are beyond the reach of governments and are far removed from all the problems that arise with different lenders.

The Federal Open Market Committee voted unanimously to raise the target for the federal funds rate to a range of 4.75% to 5%, the highest since September 2007, when interest rates peaked just before the financial crisis. It is the second straight increase of 25 basis points after a series of aggressive moves that started in March 2022, when rates were close to zero.

The three companies the SEC named in its complaint were the Tron Foundation, which supports the Tron ecosystem, the BiTorrent Foundation and Rainberry, formerly known as BitTorrent. Sun founded Tron, then bought the file-sharing service BitTorrent and issued a related token, BTT. The price of HT, a symbol linked to the Huobi exchange where Sun is an adviser, fell almost 9% in the last hour. Sun said in an interview earlier this year that he is the world’s largest holder of HT.

The SEC complaint, filed in the US District Court for the Southern District of New York, accused Sun and his companies of offering and selling TRX and BTT “as investments through several unregistered ‘bounty programs'”, which pressured people to market the coins on Social Media. Sun is also accused of “orchestrating a scheme to artificially inflate the apparent trading volume of TRX in the secondary market.”

Sun and representatives for Rainberry and Huobi did not immediately return requests for comment.