US Lawyers Go After Cryptocurrency Ecosystem with Multiple Class Action Suits Against Exchanges and Issuers
An American “litigation boutique” law firm, Roche Cyrulnik Freedman, formed in early 2020 with the specific aim of going after the cryptocurrency and cannabis sectors, filed a total of 11 class actions against 42 defendants in 16 countries on Friday, April 3, 2020 – alleging the sale of unregistered cryptocurrencies. The 42 defendants are scattered across the globe in the British Virgin Islands, Canada, Cayman Islands, China, Estonia, Hong Kong, Israel, Japan, Malta, Seychelles, Singapore, South Africa, Switzerland, Taiwan, US, and Vietnam.
Courtroom filings were discovered by the offshore information and analysis outlet, Offshore Alert, a think-tank that distinguishes themselves as offshore monetary middle consultants.
Companies caught up in the legal morass include cryptocurrency exchanges BiBox, Binance, KuCoin, as well as BitMEX with its parent company HDR Global Trading Limited, Cryptocurrency issuers Civic, Status, Block.one, Quantstamp, BProtocol, KayDex, and the Tron Foundation were also issued with class-action lawsuits. Cryptocurrency leaders including Brendan Blumer, Dan Larimer, Vinny Lingham, and Binance founder Changpeng (“CZ”) Zhao. are also named in the paperwork.
Some in the cryptocurrency community are sceptical about the move:
Reddit moderator of XRP and Ripple the Kiyote writes:
“Yeah, this is a classic shakedown class-action lawsuit. The only people who can win here are the lawyers. What they’re trying to do is take advantage of a lot of the ambiguity in the space, for example, how the SEC has been treating cryptocurrency securities. The SEC said they’d enforce Howey rule, but they also have a lot of leeway in how they interpret it. There’s no case law. Also, as other people have mentioned, a lot of these companies aren’t even in the US with US officers (though they might want to move into the US eventually). What the lawyers are hoping will happen is that these companies will settle for a token fee to have the case get dropped without any admission of guilt, just to stop the headache, then they’ll take their jacked-up lawyer fees, and all the people who signed up for the class action suit will get a check for a couple of bucks in the mail.”
One of the filings noted:
“Working to capitalize on the enthusiasm for cryptocurrencies like bitcoin, an issuer would announce a revolutionary digital token. The vast majority of these new tokens turned out to be empty promises. In reality, they often had no utility at all. The promises of new products and markets went unfulfilled, with the networks never fully developed, while investors were left holding the bag when these tokens crashed. Indeed, most of these tokens are traded at a tiny fraction of their 2017-2018 highs.”
In the ongoing saga of a two-year class-action lawsuit, filed by Ripple XRP investors an amended complaint has come to light. Investors chose to amend this lawsuit to include former XRP investor Bradley Sostack as the lead plaintiff and to add protections in the case that XRP doesn’t fall under securities regulations.
The amendment filed last week include claims that Ripple engaged in false advertising under California law.
“Lead Plaintiff brings this sixth claim for relief for false advertising in violation of California Business and Professions Code Section 17500 under the alternative theory that XRP is not a security. Defendants operate a business where they intended to, and did, sell XRP to members of the general public, including Lead Plaintiff. Defendants cause to be made or disseminated through California and the United States through advertising, marketing and other publications, statements that were untrue or misleading, and which were known, or which by the exercise of reasonable care should have been known to Defendants, to be untrue and misleading to consumers and Lead Plaintiff.”
The XRP market cap of XRP remains at around $8 billion, which is approximately ten per cent of the value in early 2018 at $80 billion. Ripple is the third-largest cryptocurrency in circulation.
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Also published on Medium.
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