YEREVAN (CoinChapter.com) – Dragonchain (DRGN), an open-source blockchain for dApp creation, came under scrutiny from the U.S. Securities and Exchange Commission (SEC) on Aug 16. The law enforcement agency claimed Dragonchain sold “unregistered securities” in its 2017 initial coin offering (ICO).
The SEC alleged that the CEO John Roets and “three Dragonchain entities” raised around $16 million in the ICO from approximately 5,000 investors worldwide, including the United States.
The company’s “personnel and agents publicly discussed DRGN’s investment value, pricing, and “listing” on trading platforms, among other things,” making DRGN securities. The public responded with a standard question; if DGRN is securities, why isn’t Ethereum token Ether (ETH)?
The SEC made headlines in the previous months by targeting several blockchain companies and crypto exchanges.
The law enforcement agency filed lawsuits against startups like Ripple Labs and declared that exchanges like Coinbase are not immune to securities laws in the U.S. The agency cites investor protection as its main concern but lacks clarity in laws revolving around digital assets.
Additionally, while Dragonchain faces the consequences of its 2017 ICO, its utility token could lose another 40% based on bearish technicals.
DRGN traded at $0.02 on Aug 17, after an over 90% uptrend since Jun 16. However, technicals spell trouble, as DRGN/USD formed a Bear Flag. The formation occurs after a sharp decline and entails two parallel trendlines that take the asset price slightly higher before initiating a new leg down.
Furthermore, the expected drop equals the preceding decline, which means the target price for DRGN would stand at approximately $0.013, or 40% lower than the current value. The declining trading volumes also contribute to the bearish outlook, showing traders’ low expectations from DRGN returns.
Also read: 3 reasons why Bitcoin market awaits another punishing selloff in HY2022.
Dragonchain token lost nearly 95% of its value since the all-time high of Arp 2021.
However, it could lose more amid the SEC probe and the bearish technicals. Notably, the token depends on the rest of the crypto market, particularly Bitcoin. Should the broader market set headwinds for Bitcoin, many altcoins might follow, including Dragonchain.
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