Investors in the case against Status Research have claimed they were tricked into parting with their money, urging a New York federal judge not to dismiss their class action against the firm.
The Swiss blockchain technology company is being sued under U.S. securities laws, with investors arguing that the U.S. rules should still apply to the firm’s unregistered digital tokens.
Status Research has rubbished the claims against it as “cookie cutter,” with 11 similar actions filed back in April against firms offering unregistered digital tokens. In response, investors have accused the company of “lawless conduct” in tricking them into investment.
Status Research, alongside its founders Carl Bennetts and Jarrad Hope, offered proprietary Status Network Tokens, or SNTs, back in a June 2017 ICO. Florida-based investor Joel Deutsch said the scheme was intentionally designed to trick investors in speculation.
“This action arises from defendants’ unlawful offer and sale of unregistered securities in connection with a wave of schemes devised to trick consumers into purchasing speculative crypto ‘tokens’.”
According to investor representatives, the company misled investors by claiming similarities with public digital currencies, and did not disclose that the firm had full control over SNT and its value.
Instead, the company should have registered the tokens as securities with the U.S. Securities and Exchange Commission (SEC), rather than engaging in an “an industry-wide failure to comply with federal and state investor protection laws.”
Status Research said Deutsch purchased the tokens on an overseas exchange, and therefore cannot hope to rely on U.S. securities laws. However, Deutsch has argued that the tokens were nevertheless purchased from within the U.S., and that the tokens were actively trading on a number of domestic exchanges at the time.
The case is set to continue, and could influence other pending actions against firms that engaged in ICOs without registering with the U.S. securities regulator.