Several Bitcoin (BTC) and Cryptocurrency companies have been alleged to have unlawfully sold several unregistered securities in the United States and may likely face legal actions. The lawsuits which were first revealed by Offshore Alert, a news service that focuses on financial crimes, revealed that a total of 11 lawsuits had been filed against 42 defendants at the federal court.
Among those implicated in the alleged lawsuits as evidenced by digital fillings included, BitMEX, protocol, HDR Global trading, Civic, KayDex, Bibox Tron Foundation, Binance, and Quantstamp as well as their founding officers including the founder of Binance and BitMEX, Changpeng Zhao and Arthur Hayes respectively.
In the suit against the Crypto companies, it stated that the companies had taken advantage of the ignorance of its audience on how cryptocurrencies worked as well as market’s lack of sophistication with digital tokens to trick the general public and the American investors into buying unregistered securities that had been packed and sold as “utility tokens”.
According to a filling, “Working to capitalize on the enthusiasm for cryptocurrencies like bitcoin, an issuer would announce a revolutionary digital token. The vast majority of these new tokens turned out to be empty promises. In reality, they often had no utility at all. The promises of new products and markets went unfulfilled, with the networks never fully developed, while investors were left holding the bag when these tokens crashed. Indeed, most of these tokens are traded at a tiny fraction of their 2017-2018 highs.”
The lawsuits are being filed by Roche Cyrulnik Freedman, the same law firm representing Ira Kleiman against Criag Wright, alleged to be the self-proclaimed Bitcoin creator. It’s also the law firm designated as counsel lead against Bitfinex in a Bitcoin market manipulation case.
Global payment firms Ripple, which owns more than half of XRP tokens is said to be facing a similar lawsuit dated back to 2018.
Bradley Sostack, former XRP Investors, who had filed the suit against Ripple on behalf of others who had bought the XRP tokens, alleged that the company had made millions of dollars by way of sales of unregistered securities to unsuspecting investors.
In his defense, Ripple had argued that the XRP tokens were independent assets and not securities as the firm did not consider XRP investors as shareholders of the company.