Eleven cryptocurrency companies are sued in a New York federal court due to violating cryptocurrency laws.
A group of investors filed multiple class-action lawsuits last Friday against major digital asset exchanges and digital token issuers, claiming that they were tricked into buying unregistered securities in the United States.
The lawsuits, filed by Roche Cyrulnik Freedman law firm, mention the biggest names in the crypto industry, including crypto exchanges Binance, KuCoin, and BitMEX operator HDR Global Trading. Accusations are made as well against blockchain organizations like Tron Foundation, Civic, Bibox, Block.one, Kyber Network, Status, Quantstamp and Bancor.
While there have been several cases over the unregistered token sales in the past, this is the first coordinated effort to push major crypto firms to follow federal and state security laws, according to website Law360.
Accusations for crypto companies
Class-action lawsuits, made by a group of investors, state that the defendants were knowingly taking advantage of investors by selling them digital tokens as utilities, not the securities. Meanwhile, the plaintiffs have not been informed about the fact and faced significant risks. According to the text of complaint for major cryptocurrency exchange Binance:
Binance and the Issuers wrongfully engaged in millions of transactions—including the solicitation, offer, and sale of securities—without registering the Tokens as securities, and without Binance registering with the SEC as an exchange or broker-dealer. As a result, investors were not informed of the significant risks inherent in these investments, as federal and state securities laws require.
In addition, accusations have been made as well for several well known individuals of crypto space, like Changpeng Zhao (Binance), Vinny Lingham (Civic), Justin Sun (Tron Foundation), Arthur Hayes (BitMEX) and others, listed on offshorealert, the financial regulatory site that first announced the news.
Not the first crypto case
Although these class-action lawsuits brought by Roche Cyrulnik Freedman law firm mark the first collective attempt to force crypto companies to comply with the federal law, such cases are not new.
The same New York’s law firm is already acknowledged as specializing in crypto due to its participation in other notable crypto-raleted cases. One of them includes Bitfinex digital asset exchange and stablecoin Tether (USDT), which were charged with manipulating the Bitcoin market back in 2017. Another case, the law firm is currently participating is a billion-worth Kleiman’s lawsuit against Craig Wright, the self-proclaimed creator of Bitcoin.
It is not clear yet how these massive lawsuits will end, however, they are speculated to be brought due to the statute of limitations on the cases in the United States. Statute of limitation obliges the cases over fraudulent activities must be investigated and brought to the court within two years from the date a fraudulent activity is disclosed.