Several cryptocurrency exchanges and token issuers are being sued by investors across the United States who claim they were sold unregistered securities. Among the companies or entities being sued are Binance, Tron, Block.one and BitMEX. Entities like Ku Coin, Bibox and Bancor are also facing lawsuits from early investors.
Block.One is Just One of Many
As the cryptocurrency arena has expanded over the years, the demand and necessity for legitimacy have expanded with it. Many investors are calling for companies that issue or deal in crypto to up the ante on their compliance efforts, which have been heavily enforced over the past two years by government agencies such as the Securities and Exchange Commission (SEC).
The SEC has required that all companies hosting token sales must appropriately register them with the agency. Granted they fail to do so they could face penalty fees and even shutdowns. As a result, many token issuers have been hit with lawsuits and financial penalties over the years including Paragon Coin, which agreed to settle at $250,000 with the SEC in 2017 so that it could continue its operations without interruption.
These latest suits, however, are different in that they are not being filed on behalf of the SEC or another governing body, but by the investors themselves. Several of these suits have already been filed in a Manhattan federal court.
Kyle Roche – a lawyer representing many of the crypto investors – explained in a statement:
The cases allege that exchanges and issuers failed to comply with federal and state securities laws intended to protect investors from unscrupulous behavior.
While many of the companies being sued are (understandably) remaining quiet at the time of writing, one of them – Block.one – has issued a short description of the circumstances at hand to give the crypto community an idea of what’s going on and what to expect. The company stated:
We are aware of the opportunistic complaints filed against several blockchain and cryptocurrency companies. We have not been served with any claims, but we are well prepared to address anything that may arise.
Lawsuits like these are becoming relatively commonplace in the past few weeks, with the most recent example centering on Tezos (XTZ). The company settled a $25 million lawsuit with investors who claimed that it failed to register a token sale with the SEC that garnered the company as much as $230 million.
So Many Suits, So Much Ground to Cover
Overall, 11 lawsuits have been filed against the companies in question. Philippe Selendy – a partner at the law firm Selendy & Gay and one of case’s leading attorneys – explained:
Not unlike the mortgage crisis that led to the Great Recession, the alleged pattern of misconduct by exchanges and issuers yielded billions in profits for wrongdoers through a basic betrayal of public trust.
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Source: Live Bitcoin News