Good morning. Here’s what’s happening:

Prices. Bitcoin, other cryptos and the SEC are rallying despite recent SEC actions.

Insights Binance, FTX and other exchanges have been accused of comingling their assets. However, there are some differences.

Bitcoin Regains Lost Ground

Bitcoin climbed back above $27,000 for the first since the weekend, despite zigzagging along the way.

The largest cryptocurrency, based on market capitalization, was trading at $27200 recently, an increase of 4.3% in the last 24 hours. BTC dropped to near $25,400 in the hours following the SEC’s announcement of a lawsuit filed against Binance, which is the largest crypto exchange based on trading volume. Bitcoin started to rise by the evening and maintained its upward trend even after the SEC filed a second suit against Binance’s rival Coinbase. Later in the day requested a Federal court grant a temporary order freezing assets linked to Binance.US.

In an email sent to CoinDesk, Joshua Franklin, CEO of the digital asset information service platform The Tie and co-founder, said: “The fact that there has been a rebound in the market leads me to believe this was at least partly priced in.” Gensler’s action is not surprising.

Read More: Coinbase traders withdraw $600M in one day amid SEC lawsuits

Ether was also on the rise for most of Tuesday, trading near $1,900. This is a 4% increase from Monday at this time. Binance’s BNB token has been on the rise for a few days after a recent drop of more than 10%. ADA and SOL tokens from smart contract platforms Cardano & Solano regained a fraction of the ground they lost during the lawsuit aftershocks. The former gained about a half a percent and the latter, more than 1%. The MATIC token from Layer 2 platform Polygon fell by about 1.5%. The SEC classified these tokens as unregistered securities in its filing.

The CoinDesk Market Index is a measure for crypto market performance. It was up by 4.8%.

The Nasdaq Composite, which is heavily weighted in technology, and S&P 500, a stock index that includes several major tech companies, such as chipmaker Nvidia rose slightly, with the Nasdaq Composite reaching its highest level in over a year, and the S&P 500 reaching its highest in the past 10 months.

Franklin, from The Tie, noted that institutional investors are still ambivalent after the spectacular collapse of FTX in November. He also pointed out how harsh U.S. regulations have become.

Read more: SEC crackdown could drive crypto firms out of the U.S.

Franklin wrote: “Many funds who invested in FTX were burned and some partners who led their firms’ FTX transactions were fired.” Many VCs have become nervous about entering the crypto market. “There is a similar fear among institutional investors like pension funds and endowments who were generally burned by their previous crypto allocations.”

Franklin said that hedge funds, which were not too long ago the fastest to enter the crypto market, had also “slowed down” due to concerns over regulation, lack of credit, and “viable platforms for trading in the U.S.,” as well as limited custody options, and anxiety about doing business digital asset firms who may not survive the crypto contagion.

Why isn’t bitcoin falling more? Cryptos Are Acting More Like Commodities Than Securities

Franklin added that he was optimistic about the positive changes that are taking place in Europe and Asia.

The Biggest Gainers

Biggest Losers

Binance’s and FTX’s Alleged CoMinglings aren’t the same

Binance has been sued by the Securities and Exchange Commission for poor financial controls and mismanagement of customer funds. Reuters had accused Binance of commingling company and customer funds in a report weeks earlier. The company’s chief communication officer refuted the claim.

It might be tempting to compare and contrast the accusations against FTX that Binance also mixed funds.

These comparisons are superficial. Although they both could be described as coexistence, their process and implications differ.

The SEC claims in its complaint that entities linked to Binance CEO Changpeng Zhao, Merit Peak, and Sigma Chain, had access to billions of dollars from customer funds. According to the SEC’s complaint, 200 million dollars were reportedly transferred by BAM Trading (a Binance-related company) to Sigma Chain (another entity controlled CZ), and $62.5 million was sent from a Binance account.

It’s difficult to call it anything else than co-mingling if this is true.

BNB, the native token of its exchange, is not mentioned.

FTT is at the heart of FTX’s co-minging issue, and it played a key role in Alameda Research.

CoinDesk published a report in November that a significant portion of Alameda’s assets were FTT tokens issued by FTX. This arrangement raised serious questions about the interconnectedness between the two entities.

Alameda was at that time a major investor and market maker in the crypto-economy. The market was therefore concerned with how much Alameda’s investment power had been printed out of thin air.

BNB is not an investor like Alameda. Binance doesn’t have the same level of investment as Alameda, nor does BNB make up a significant portion of any balance sheet.

Sam Bankman Fried later admitted not segregating client accounts. This later became part of the prosecution’s case against him. This sounds very similar to what CZ has been accused of. Binance’s allegations are more focused on the alleged diversion and interference of U.S. operations. The issues with FTX/Alameda, however, relate to the blurred lines and non-segregation customer funds.

The same but different.

We’ll find out in the next few weeks just how much CZ’s empire is affected.

Important events.

CoinDesk TV

If you haven’t seen it yet, here is the latest episode of “First Mover” on CoinDesk TV.

Crypto markets continued to fall as the SEC announced that it would charge Coinbase with operating as a non-registered securities broker, exchange and clearing agency. The SEC announced the charges less than one day after it charged Binance for multiple securities violations. Ashley Ebersole from 0x Labs, Chief Legal Officer, weighed-in on the details. Vetle Lunde (K33 Senior Analyst) also dived into the market reaction to the news.

North Korean hackers hacked Atomic Wallet: Elliptic wallets that stole funds from Atomic users are linked to known Lazarus Group’s addresses, crypto tracing company said.

Gary Gensler’s Evolving Crypto Position – in Quotes: Gary Gensler has evolved from supporting technology at MIT, to a full swing offensive against the crypto industry.

Optimism completes the ‘Bedrock Hard Fork’ in pursuit of Superchain: The developers behind the layer-2 scaling for Ethereum claim that the upgrade will cut gas fees and deposit confirmation times.

A new report by One-Two punch reveals the SEC’s view on Binance Coinbase and the rest of the crypto market: It’s no longer a mystery how the U.S. Securities and Exchange Commission is going to go after the big digital asset platforms. However, rumours about skeletons found in Binance’s wardrobe have sparked more anger.

Sam Reynolds and James Rubin edited the book.