Report: Cryptocurrency Related Lawsuits Skyrocketed in 2018; Up by 300 Percent
In contrast with the bear market we have watched throughout the year it seems that cryptocurrency-related lawsuits have skyrocketed as far up to 300 percent, reports Dior, November 19, 2018.
Crypto Lawsuits Go North
While bitcoin continues to go south, the business for digital currency focused lawyers looks to have a bright future ahead. Despite the gigantic market growth, 2018 has seen a remarkable downfall for the cryptocurrency market. The regulatory crackdown on Initial Coin Offerings (ICOs), cryptocurrency and digital assets are some of the reasons for this downfall, which, in turn, lead to a big boom in class lawsuits against cryptocurrency firms.
The Weekly Institutional Publication and Data Resource Analyzing Digital Currency & Assets unit Diar reported that forty-five cryptocurrency-related lawsuits were filed in the first half of this year. This was three times the number of lawsuits filed last year. And the SEC is said to be responsible for 30% of the cases filed indicating a dozen ICOs that will also likely follow suit in registering with the regulator as a security.
Diar report notes the SEC to be directly responsible for at least 30% of the cases filed, and recent moves have shown the financial regulator is preparing for a lot more. Last week, the SEC claimed that will be clamping down cryptocurrency startups that fail to register their tokens as securities.
According to the report, Jay Clayton, Chairman of the SEC, stated:
“Any token that was used in a fundraising process and can give investors a return, or investors can get a return on the secondary market by selling the token to someone else, qualifies as a security.”
Companies Already Caught on the Rampage
The EtherDelta digital asset trading platform was one of the first companies being hit by the SEC, as the agency ordered the shutdown of the platform and fined the company $300,000. Even so, Diar reported that the SEC’s penalty seems a little light compared to what the SEC usually dishes for this type of fraud.
Last year, after launching their initial coin offerings, Paragon, who raised $12 million, and Airfox, who raised $15 million, were demanded to pay $250,000 in fines and return all funds to investors, as well as registering their tokens as securities. In March, the Agency inflicted $1.25 million in fines to Merrill Lynch, the ‘wealth management’ division of Bank of America, for the sale of unregistered securities that raised $38 million from investors.
The US Securities and Exchange Commission regulatory crackdown seems to have picked up its pace which comes as a reminder that we will still be seeing a lot more companies caught on the rampage.