With the fall in cryptocurrency prices and the crash of one stablecoin, some investors tried to recover their losses in US courts. This is how cryptocurrency proceedings have progressed and the challenges investors may face.
Who is being sued?
The companies that created the cryptocurrencies, the exchanges that promoted them, and the individuals who promoted them were all sued.
Kyle Roche, who represents cryptocurrency holders in several lawsuits, said U.S. claims about cryptocurrencies ban fraud and manipulation and require federal securities or commodities to register products and operators with U.S. authorities. He said it was often accompanied by allegations of violations of the law.
A recent proceeding was aimed at Terraform Labs, the company behind TerraUSD, over the recent collapse of Stablecoin.
Cryptographic investors have sued a Seoul-based company and its CEO Do Kwon on June 17 for failing to register the company’s digital assets as securities, and several ventures to support TerraUSD. Worked with a capital fund to trick investors.
A spokesman for Terraform Labs called this claim worthless.
The tether behind the world’s largest stablecoin has been accused of tampering with the crypto market in a lawsuit in New York. And Ripple, whose founder created Token XRP, was filed in a proceeding in California alleging that he had sold unregistered securities.
Both proceedings have overcome the motion to dismiss.
A spokeswoman said Ripple challenged the allegations and defended them. Tether did not respond to the request for comment.
Cryptocurrency exchange is another target for investors trying to recover their losses.
Binance US was sued on June 13 by investors alleging that it was mistakenly sold as a safe asset before TerraUSD collapsed. And in March, investors accused Coinbase of selling 79 digital assets as unregistered securities.
Binance and Coinbase have denied the allegations.
Investors are also suing celebrities who publicly promote cryptocurrencies. A lawsuit filed in Los Angeles alleges that reality show star Kim Kardashian and boxing legend Floyd Mayweather Jr. engaged in cryptocurrency pumping and dumping. Representatives of Kardashian and Mayweather did not respond to requests for comment.
Legal hurdle
The wave of proceedings filed against the exchange in 2020 allegedly contributed to the illegal boom in digital coins, with judges claiming that some of the allegations were too late or had too little ties to the United States. After discovering it almost failed.
Timing shouldn’t matter in the new proceedings, but crypto holders trying to sue foreign companies in US courts can still face hurdles.
Token holders won a default ruling in New York against Singapore-based exchange KuCoin, but withdrew the proceedings because a court in Singapore did not allow the company to provide information to enforce the ruling. rice field.
KuCoin did not respond to the request for comment.
Another potential hurdle for investors making claims under securities or commodity law is to show that tokens meet the legal definition of those assets. Some courts have ruled that certain cryptocurrencies meet the bill, but the issue remains unresolved.
Cryptocurrency holders may face additional obstacles when going after the exchange. The Coinbase proceedings argue that the exchange is not a party to the transaction and that private litigation parties cannot enforce registration requirements.
Is there a crypto holder who won the court?
Although many cryptocurrency proceedings are pending, the SEC has recovered some funds for a small number of digital asset investors through a settlement.
But even after the settlement, investors can face long wait times and still have less consequences than they fired.
Last year, blockchain company Block.one agreed to pay $ 27.5 million to settle a token holder’s proceedings for violating securities law.
According to court filings, more than 100 token holders have filed claims worth more than $ 75.7 million. The settlement has not yet been finalized. -Reuters
