In the crypto realm, the likes of Binance and Coinbase have faced a wrath of scrutiny from the U.S. Securities and Exchange Commission (SEC), raising questions over the stability and future of digital assets. Amid this, investors may wonder what happened to Filecoin ($FIL) - a.k.a. a current leader in the decentralised file-sharing game.
SEC Woes: What Happened to Filecoin After Grayscale's Withdrawal?
The story starts with asset manager Grayscale, when it disclosed that the SEC had requested the withdrawal of its application to transform its Filecoin (FIL) Trust product into a structure resembling a public company.
In response, Grayscale then submitted a ‘Form 10’ to transition its Filecoin Trust product into a reporting company, obligating it to file quarterly and annual reports. However, the SEC subsequently requested that Grayscale retract the application once again.
Shedding light on such development, Grayscale announced in a press release that it had received a letter from the federal regulator stating that FIL "satisfied the criteria of being considered a security."
Further, Grayscale still believes that FIL shouldn't be considered a security - based on federal laws - meaning the company still plans on outlining these concerns to the SEC. Further, with it still being unclear as to whether an agreement will be made, Grayscale may need to explore alternative options, such as adjusting the Trust's registration, or even dissolving it.
Moving to April 2023, Grayscale revealed that the SEC Divisions of Corporation Finance and Enforcement had made contact regarding Grayscale's examination of FIL within the framework of securities laws. Here, Grayscale acknowledged FIL's potential security status, however it also recognised that the SEC and courts could still make a different verdict on the matter if put forward again.
Registration with the SEC and consistent disclosures are mandatory for security issuers. Additionally, the SEC's increased scrutiny over cryptocurrencies - particularly those funded through initial coin offerings (ICOs) - has compelled some projects to refund investors or cease operations. Notably, Filecoin secured over $250 million through an ICO back in 2017.
Following the filing announcement, FIL experienced an initial 3% decrease in value (equivalent to 15 cents). As of the time of writing, the asset is trading at $6.07.
Filecoin Price History
As part of our answer to ‘what happened to Filecoin,’ now let’s examine its price history.
While past performance doesn't guarantee future results, understanding the coin's historical trends provides valuable context for interpreting or making a Filecoin price prediction.
Upon its initial entry into the open market in late 2017, Filecoin held a value of approximately $11 - reaching its peak at $25 in January of the subsequent year during a crypto bubble. Following this surge, the market experienced a downturn, meaning FIL remained in the vicinity of $5 for a considerable portion of the following two years or so.
In October 2020, FIL closed the year at $24.35 after its mainnet launch. The next year saw an all-time high of $236.84 in April - followed by a summer dip of below $50, a September recovery of above $100, and a year-end close at $34.27.
In 2022, Filecoin faced turbulent times, with its price plummeting below $10 in May, dipping below $5 in June, and recovering slightly to over $10 in July and August. Ultimately, it closed the year at $3.01, marking a 90%+ loss in value.
In early 2023, FIL surged to $9.40 on February 19, but faced a downturn after the SEC labelled it an unregistered security within the Grayscale matter in May (dropping to $4.55). Despite initial market resilience, lawsuits from Binance and Coinbase led to a further decline, hitting $2.88 by June 12.
Within the subsequent month or so, FIL staged a comeback, with its value reaching approximately $4.41 on July 17, 2023.
During that period, a circulating supply of 436.7 million FIL was observed out of a total of 1.9 billion. This configuration bestowed a market capitalization of $1.9 billion upon the cryptocurrency, positioning it as the 30th largest crypto based on that metric.
Filecoin Price Analysis
The revelation of the SEC suing Binance and Coinbase profoundly impacted Filecoin. Before the Binance case announcement on June 5, the coin was trading at $4.66. However, by June 10, it had plummeted to $2.88, marking a substantial 38% decline within five days.
Despite a recovery of over 50% by July 17, Filecoin still lagged by being down more than 5% from its pre-crash levels.
In 2014, California-based Protocol Labs initiated the development of the Filecoin project to establish a decentralised platform for distributed storage of diverse information.
As part of the project, a novel communication protocol known as IPFS (InterPlanetary File System) was conceived to supersede the antiquated HTTP mechanism.
The architects behind Filecoin aspired to rival storage industry giants such as Google, Amazon, and Dropbox. Their vision involves crafting a distributed network that accommodates a broad spectrum of information, ranging from individual files to extensive databases.
Throughout the testnet phase, Filecoin futures contracts were available for ICO coins, trading in the range of $3 to $10. Following the mainnet launch, the value of Filecoin surged to $105 - however, by the next day, this rate halved to around $53.
Simultaneously, TRON ($TRON) founder Justin Sun levelled accusations against the Filecoin team, alleging their involvement in deliberately lowering the asset's price. Here, Sun claimed that the Filecoin founders breached an agreement with FIL investors under the SAFT concept. In response, Juan Benet refuted Sun's accusations, labelling them false.
Citing the Verge article, Benet asserted that the head of the Tron Foundation resorted to deceptive practices for financial gains. Further, he characterised the accusations as an effort to claim credit for the project's success illegitimately.
What Happened to Filecoin - Conclusion
To secure the enduring sustainability of the protocol, Filecoin should prioritise innovation and the development of practical use cases, fostering demand for FIL coins. Their continuous focus on network-level enhancements and the initiation of applications reflects notable progress.
This strategic approach addresses the essential question of "what happened to Filecoin," by highlighting their proactive measures for protocol enhancement and value generation.
This is because Filecoin's development of the Filecoin Virtual Machine (FVM) enables smart contracts, enhancing permanent storage solutions and strengthening its position against competitors like Arweave in decentralised storage.
What Happened to Filecoin - FAQ
What is Filecoin used for?
The Filecoin blockchain functions as a decentralised distributed storage network, with the FIL cryptocurrency serving as a means of supporting its operations.
Will Filecoin reach $100?
While there is a possibility, most sources indicate that if it occurs, it's not anticipated for a considerable duration. PricePrediction.net forecasts the coin entering triple digits in 2032. However, investors should be aware that it has surpassed $100 in the past, with the most recent instance being September 2021.
Should I invest in FIL tokens?
Conduct thorough research before considering an investment in Filecoin, examining FIL and comparable cryptocurrencies like Storj Labs (STORJ). However, the paramount advice remains never to invest an amount exceeding what you can comfortably afford to lose.
Will FIL go up or down?
The current outlook is uncertain. Optimistic long-term forecasts can be inaccurate, and prices are subject to upward and downward movements.
Is Filecoin a good investment?
Filecoin has lost over 90% of its value since autumn 2021. Despite initial resilience to SEC concerns, lawsuits against Binance and Coinbase brought renewed attention. Still in the top 50 by market cap, its recovery remains uncertain.
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This article is intended for educational purposes and is not financial advice.