The escalating conflict between Iran and Israel caused a sharp drop in cryptocurrency prices on Sunday, April 14.

Last week, the U.S. Securities and Exchange Commission (SEC) sent Uniswap a Wells Notice, announcing its intention to sue the exchange amid increased regulatory scrutiny. Meanwhile, FTX founder Sam Bankman-Fried is seeking to appeal the ruling.

The Calm Before the Storm

Cryptocurrency markets had a good start to the week, with the global cryptocurrency market capitalization surging 3.6% to a three-month high of $2.62 trillion on April 8, with Bitcoin (BTC) retaking the $72,000 price threshold after a 3% gain.

On April 8, Bitcoin rose 4% to near its all-time high after suffering losses in the previous pullback. However, the next day, as U.S. inflation data came out and turned out to be more bullish than expected, the price of the top crypto asset fell, falling 3.45% to $68,000 on April 9.

This downward trend was short-lived as Bitcoin eventually recovered, rising 2.15% on April 10 to revisit the $70,000 region. This recovery has continued despite a decrease in activity from large traders (whales) that could be observed.

According to reports on April 9, BitMEX founder Author Hayes is skeptical about whether Bitcoin can return to and stabilize at its recent all-time high as the halving event approaches. Hayes expects that the price of Bitcoin may fall in the short term before and after the halving.

Iran-Israel conflict exacerbates market crash

As the week progressed, bears regained control, with Bitcoin falling to the $65,000 region for the first time in over a week on April 12. As Bitcoin fell, a broader market crash ensued, causing global cryptocurrency valuations to fall to $2.2 trillion on April 12.

Tensions surrounding the upcoming Iran-Israel conflict exacerbated the market decline. This led to a massive liquidation in the market, with more than $86 million of funds flowing out of the derivatives market.

Iran ultimately launched more than 100 drones towards Israel on April 13, further escalating tensions. Following this unprecedented attack, the cryptocurrency market saw a massive drop, with Bitcoin falling to a one-month low of $60,660 on April 13.

Despite the liquidations, Edward Snowden, a prominent computer intelligence consultant and Bitcoin advocate, stressed that there is no reason to panic.

Uniswap receives Wells notification

While the cryptocurrency community is busy dealing with price fluctuations, the U.S. Securities and Exchange Commission (SEC) is considering the possibility of taking legal action against Uniswap, a decentralized exchange based on Ethereum. As the world's largest decentralized exchange, the regulatory challenges and legal risks faced by Uniswap have attracted widespread attention in the market.

Notably, Uniswap revealed on April 10 that it had received a Wells Notice from the SEC, with the securities regulator announcing its intention to take legal action against the decentralized exchange.

Uniswap founder Hayden Adams expressed disappointment at the move, stressing that he and his team planned to fight. Following reports of the developments, the exchange’s native token, UNI, fell 17% to $9.27 as selling intensified.

US Regulatory Environment

The broader U.S. cryptocurrency regulatory environment came into focus this week amid reports that the Treasury Department is seeking greater authority to crack down on cryptocurrency use by sanctioned entities such as North Korea, Russia and Iran.

U.S. Senator Kirsten Gillibrand revealed this week that Congress has been discussing introducing a bipartisan bill to regulate stablecoins, shortly after Ripple revealed its intention to launch a stablecoin this year.

As federal agencies and Congress in the United States are actively pushing for regulation of the cryptocurrency industry, Steven Nerayoff, a former Ethereum consultant, has filed a lawsuit against the U.S. government, seeking up to $9.6 billion in damages for what he believes was unfair and harsh treatment by government agencies over the past four years.

Global regulatory efforts

Regulatory efforts in other jurisdictions besides the U.S. are also taking hold. This week, Russia’s central bank called on the country’s lawmakers to speed up the introduction of a bill that would regulate the use of cryptocurrencies, particularly for international settlements amid U.S. sanctions.

Meanwhile, in Hong Kong, reports this week suggest that cryptocurrency exchanges are struggling with regulatory uncertainty. This prevailing environment is now prompting several companies to explore moving overseas.

In British Columbia, the government is looking for ways to address the high energy consumption associated with cryptocurrency mining operations. To this end, the region is seeking to regulate the cryptocurrency mining industry through legislative amendments.

Bankman-Fried appeals verdict, Do Kwon's extradition approved

Bankman-Fried's attorneys argued in an April 8 letter to Judge Lewis Kaplan that it would be more convenient to keep Bankman-Fried in a temporary detention facility in Brooklyn, where he has been since last August, until his appeal is completed.

Bankman-Fried was sentenced to 25 years in prison. On April 10, former FTX executive Ryan Salame pleaded guilty and will be sentenced on May 28. Other former FTX executives, including Gary Wang and Caroline Ellison, are also awaiting sentencing.

In a rollercoaster ride, Terra founder Do Kwon’s extradition has once again been approved by a Montenegrin court, with Montenegrin Justice Minister Andrej Milovic set to decide whether the South Korean developer will be extradited to his home country or the United States to face charges.

Solana Suffers from Congestion

Solana has had a mixed moment this week, with increased network adoption and congestion issues coexisting. CoinGecko revealed on April 8 that DEXs on Solana account for the majority of trading volume in the DeFi scene.

This is mainly due to the growing deployment and interest in Meme coins on Solana following the success of Bonk ( BONK ) and Dogwifhat ( WIF ). However, with the increase in activity on the network, Solana encountered network congestion issues. To address this, Solana’s development team Anza conducted a system update. #伊朗  #以色列