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Algorand in new SEC suit: What should ALGO holders expect now

2min Read

The SEC alleged that Algorand Foundation was a culprit in boosting its token. Although there are no direct charges yet, ALGO may remain in consolidation.

Algorand in new SEC suit: What should ALGO holders expect now

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  • The regulator named the token among those who had violated its rules.
  • ALGO’s volatility was no more contracting. 

Alongside other parties, Algorand [ALGO] has become the latest token to have caught the attention of the U.S. Securities and Exchange Commission (SEC).

And, as expected, the regulator did not hold back in labeling the native token of the self-sustaining blockchain as a security. 


Realistic or not, here’s ALGO’s market cap in ETH’s terms


However, the filing against ALGO and the Algorand Foundation was not standalone. Instead, the subjects were mentioned in the SEC lawsuit against Bittrex. Other tokens in the same boat include Dash [DASH], and Omega Network [OMG] to name a few.

Did Algorand sell water to a well?

The SEC complained that the Silvio-Micali-founded project Proof-of-Stake (PoS) consensus did not exempt it from committing atrocities against the regulatory policies.

Accusing the foundation of promising rewards on the Bittrex platform as far back as 2019, the SEC noted:

“From the time of its offering and continuing through the Relevant Period, ALGO was offered and sold as an investment contract and therefore a security.”

The statement also mentioned that Algorand Foundation had a hand in the ALGO price rise around February 2022, pointing out that there were potential plans for a repeat.

But at the time of writing, the ALGO volume was nowhere near some of the highs registered in 2022. Although the metric had a 24-hour 64% hike, it had little to no effect on the price which was $0.22. This infers that there was no strong momentum backing the volume to positively impact the token value.

Algorand volume and price volatilty

Source: Santiment

Challenges for traders

However, the price volatility which reveals the fluctuations of an asset had slightly risen to 0.015. Thus, traders might need to watch the exposure to risks and large price changes if ALGO was one of the tokens to be traded.

Furthermore, information from the on-chain analytic platform showed that the ALGO funding rate had remained positive for quite a while. This means the longs were willing to pay the periodic amounts to shorts to hold their position.


Read Algorand’s [ALGO] Price Prediction 2023-2024


However, major upgrades around the Algorand blockchain have not been particularly existent. At press time, the development activity was down to 12.24. A situation like this does not add up to a bullish trajectory for ALGO.

Algorand funding rate and development activity

Source: Santiment

However, it is important to note that the outcome of the lawsuit with Bittrex is uncertain, and it may take some time for the case to be resolved.

If the SEC is successful in its lawsuit, Algorand Foundation may be required to pay penalties. And this could have negative impacts on the ALGO token’s price. At press, the Algorand Foundation had not commented on the matter.

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Victor Olanrewaju is a full-time journalist at AMBCrypto. Settled in Lagos, his fascination with blockchain technology and the cryptocurrency market arose out of his love of freedom and everything free. As a Nigerian, Victor understands the impact unfounded financial restrictions have on a population. He sees Bitcoin and cryptos as a way to circumvent these obstacles, as a tool for value creation despite all the setbacks. A graduate in Physics, Victor previously worked as a Senior Marketer at Melange Technologies. Before that, he dealt with crypto-marketers on a regular basis in his capacity as Copywriter at Ventrix Media. At AMBCrypto, Victor’s focus is on assessing the real effectiveness of both on-chain and off-chain developments on a project and its community sentiment.
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