Crypto Market Sinks Following Ether Security Label by NYAG

Today’s negative move across the crypto markets is likely a function of several factors, including regulatory risk pricing, Silvergate’s closure and enforcement actions, analysts say

article-image

Crypto price down on ether news

share

Digital assets took a beating Thursday following revelations New York Attorney General Letitia James had called out ether as a security in a lawsuit against crypto exchange KuCoin.

James filed a lawsuit against Seychelles-based KuCoin, alleging a breach of securities laws by providing certain token offerings which include ether, luna and the TerraUSD stablecoin.

KuCoin has been operating in New York without registering itself as a securities and commodities broker-dealer, James said in the suit.

The NYAG’s claim could set a precedent in the broad digital asset sector and cause a ripple effect to other jurisdictions, Jeff Yew, founder of digital asset manager Monochrome told Blockworks.

Blue chip digital assets bitcoin (BTC) and ether (ETH) both fell more than 8% in a flurry of trades that dragged prices to their lowest point in almost two months. The pair last traded around $19,800 and $1,390 near their daily lows.

The recent sell-off in ether, in particular, is likely coming from Coinbase, Ho Chan Chung, head of marketing at on-chain analysis platform CryptoQuant told Blockworks.

CryptoQuant’s Coinbase Premium Index for ether has dipped to levels last seen on Jan. 18 at -0.01, indicating a greater level of selling pressure from the publicly-traded exchange Chung said.

The total market capitalization of the crypto market has also dipped below $1 trillion for the first time since Jan. 14, after shedding 7.8% of its value to $960 billion, CoinGecko data shows.

Regulation through litigation

Ever-increasing pursuits of regulation through enforcement and litigation from leading US agencies, namely the Securities and Exchange Commission (SEC), are forcing a rethink to what had been a good run for digital assets this year.

Crypto is now entering its “Passion of the Christ” phase, Jehan Chu, founder of Hong Kong trading firm Kenetic, told Blockworks.

“The SEC and NYAG are doing their best to crucify the industry once and for all against a backdrop of an increasingly hawkish Fed and contagion now infecting banks like Silvergate and Silicon Valley Bank.”

Rich Falk-Wallace, CEO of crypto data analytics platform Arcana agrees, pointing to today’s negative move across the crypto markets as a function of several factors.

That included crypto’s lockstep moves with the US stock market, as reflected by a 1.8% decline in the SPDR S&P 500 ETF (SPY) and broad enforcement actions.

An elevated regulatory risk across liquid staking stablecoin as well as crypto bank Silvergate’s intentions to wind down its operations was also feeding the sell-off.

“The fact that the SEC has brought actions against Kraken’s liquid staking product and Paxos’ stablecoin have created the perception that more, even larger, regulatory enforcement actions are likely to be brought across the ecosystem,” Falk-Wallace said.

Silvergate announced Thursday it would fold its business following a particularly poor quarter and a run on the bank that drained it of some $8 billion in assets. 

The run was sparked by regulatory concerns around the use of its payment network to enable thousands of FTX customer transfers to flow into accounts of Alameda Research.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Pipe’s testnet has delivered 60+ PB of data across ~290,000 Point of Presence (PoP) nodes

article-image

375ai will hold TGE at the end of the month, CEO Harry Dewhirst told Blockworks

article-image

Block’s subsidiary adds direct Bitcoin integration and AI-powered ordering tools for small businesses seeking streamlined transactions

by Blockworks /
article-image

The deal integrates Dinero’s staking suite into Plume’s real-world asset platform as it gains SEC transfer agent status

by Blockworks /
article-image

The state’s decision opens staking access to New Yorkers, signaling a regulatory shift toward broader crypto participation

by Blockworks /
article-image

The startup says it aims to rival Stripe and Worldpay by using stablecoins to speed merchant settlements from days to seconds

by Blockworks /