Multiple Crypto Firms Face Court Action

Multiple Crypto Firms Face Court Action

As first reported by court monitors OffshoreAlert, multiple cryptocurrency-related companies were named in separate class action lawsuits filed at the US District Court in the Southern District of New York on Friday.

10 class actions against 39 defendants in 15 countries alleging sale of unregistered cryptocurrencies https://t.co/rGuffz2l03

— OffshoreAlert (@OffshoreAlert) April 4, 2020

The list of defendants include major entities from the cryptocurrency arena including the Tron Foundation, Binance, Block.One, BitMEX, KuCoin, Civic, and Quantstamp.

High profile individuals from the companies involved – such as Changpeng Zhao and Yi He from Binance and Block.one’s CEO Brendan Blumer and CTO Dan Larimer – were also directly named in the court filings.

Defendants are stated to be located in more than a dozen countries including Canada, China, Hong Kong, Israel, Japan, Singapore, South Africa, Switzerland, Taiwan, U.S., and Vietnam together with smaller islands like the British Virgin Islands, Cayman Islands, Malta and the Seychelles.

Howey or Not

The barrage of litigation is centred around the selling of cryptocurrency tokens which the plaintiffs claim are unregistered securities as defined by the somewhat antiquated Howey Test. The test stems from the 1940s and is a means of deciding whether an asset should be classed as a security under US federal proceedings.

New York-based Roche Cyrulnik Freedman are the lawyers filing the class actions and they have a track record of crypto prosecutions having been the team representing the Kleiman estate’s lawsuit against Satoshi-claimant Craig Wright.

In the new class action against Block.one, the plaintiffs have reignited the debate around the lengthy and profitable EOS initial coin offering (ICO) which the company agreed to pay a penalty of $24 million to the US Securities and Exchange Commission (SEC) in September last year.

However, speaking to online news portal Decrypt, a spokesperson for Block.one is quoted as saying “We are aware of the opportunistic complaints filed against several blockchain and cryptocurrency companies. We have not been served with any claims but are well prepared to address anything that may arise.”

Delays in serving papers may be attributed to the recent curtailing of operations at the Court in response to the COVID virus.