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Home General News

Can Crypto Holders Recover Losses In Court?

Hania by Hania
August 6, 2022
in General News
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Can Crypto Holders Recover Losses In Court
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In Brief:

  • Who is being sued?
    • Related articles
    • Top 5 Metaverse Tokens You Must Have In Your Portfolio
    • “India Leads The Global Crypto Adoption with 53% Of Users In 2023”
  • Tether
  • Ripple
  • Binance
  • Coinbase
  • Celebs being sued
  • Legal Hurdles
  • Case of KuCoin
  • Have any crypto holders won the case in Court until now?
      • Wrapping Up

A downturn in crypto prices and the crash of one of the stable coins has led some investors to think about how to recover their losses in the U.S. court. Here are how crypto litigation has fared so far and the challenges these investors may face.

Who is being sued?

Major companies that have created crypto exchanges that resulted in their sale enhancement and individuals who promoted them have all been sued.

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Kyle Roche, who represented cryptocurrency holders in many lawsuits, said that U.S. claims over crypto usually involve alleged violations of federal securities or commodities laws, which forbid fraud and manipulation, requiring operators and products to be registered with U.S authorities.

The latest lawsuit took aim at Terraform Labs, the company behind Terra USD, over the stable coin’s recent collapse.

A crypto investor sued the company of Do Kwon, the chief executive of a Seoul-based company, on June 17, alleging that they failed to register the company’s digital assets as securities. Also, they are alleged to be working with various venture capital funds that backed Terra USD to defraud investors. These claims are considered meritless by a spokesperson of Terraform Labs.

Tether

Tether is considered as world’s largest stablecoin. Recently, it has been accused of rigging the crypto market in a lawsuit in N.Y., USA.

Right now, the company is facing at least three other pending legal actions; it is facing a lot of legal hassles, thereby releasing a blunt three-line response calling the suit “another nonsense, copycat lawsuit” and regarding it as a “shameless money grab.”

This lawsuit has survived motions to dismiss. However, Tether hasn’t responded to the suit yet.

Ripple

The financial tech startup Ripple has also been sued by one of its investors, who alleged that it violated state and federal laws by offering unregistered securities.

The lawsuit sought class-action status and was filed by Ryan Coffey in the San Fransisco County Superior Court. Likewise, Tether, this lawsuit has also survived motions to dismiss. Ripple is disputing the allegations and will defend against them.

Crypto exchanges have been another target for investors to recoup their losses.

Binance

On June 13, 2022, a U.S. investor claimed that Binance falsely marketed Terra USD as a secure asset ahead of the collapse of this stablecoin. So, Binance and its CEO were sued for that. Binance denied these claims.

Coinbase

Coinbase was sued for allegedly selling 79 unregistered crypto securities. A class-action lawsuit has been issued against Coinbase, alleging that it allowed consumers to trade 79 unregistered coins, including Shiba Inu, XRP, and Dogecoin. Coinbase called these allegations baseless.

Celebs being sued

Celebrities have also been sued by investors who have publicly touted cryptocurrency. A lawsuit filed in Los Angeles claims that Kim Kardashian, a reality T.V. star, and Floyd Mayweather Jr., a boxing legend, were involved in a crypto pump and dump.

The lawsuit was filed on Jan 7 in Los Angeles federal court, claiming the celebs touted tokens sold by EthereumMax, for boosting its price and making themselves a profit “at the expense of their investors and followers.”

According to the lawsuit, Kim Kardashian used the Instagram platform to promote EthereumMac in June 2021, when she had 250 million followers.

Whereas Mayweather promoted EthereumMax on his boxing trunks during a widely viewed fight along with Logan Paul, a YouTube star, in June.

Representatives of both Mayweather and Kardashian responded to requests for comment.The company, EthereumMax was also named in the lawsuit.

Legal Hurdles

A wave of lawsuits in 2020 against exchanges alleging they fueled an illegal boom in digital coins largely failed after judges found some of the claims were too late or had little connection to the United States.

Timing isn’t a big issue for newer lawsuits, but crypto holders seeking to sue overseas companies in the Court of the United States would still face legal hurdles.

Case of KuCoin

Can Crypto Holders Recover Losses In Court

Token holders won a default judgment in New York against KuCoin, a Singapore-based exchange but dropped the case after a court in Singapore would not make the company provide information and details for enforcing the judgment. KuCoin also didn’t respond to a request for comment.

Another great hurdle in this regard is investors who filed claims under commodities laws or securities would need to show their tokens to meet the legal definition of those assets. Some courts have ruled that some cryptos fit the bill. However, the issues are still unsettled.

Crypto holders may face additional problems and hurdles when going after exchanges. For instance, In the Coinbase lawsuit, the exchange argued that it was not a party to the transactions and that private litigants cannot enforce registration requirements.

Have any crypto holders won the case in Court until now?

Many lawsuits regarding cryptocurrencies and exchanges are still pending, and the SEC has reclaimed some funds for investors in a handful of digital assets through the settlements.

It’s hard to predict that if crypto holders recoup losses in the Court or not, as even after a settlement, many investors would face a great deal of struggle and long waits. Much time and patience are required to get over the losses.

In 2021, Block, the blockchain company, agreed to pay $27.5 million to settle token holders’ lawsuits, alleging that it violated the security laws.

According to the court filings, more than 100 token holders had filed claims worth more than $75.7 million. They have tried, but these settlements are not yet confirmed and need final approval.

Wrapping Up

Bitcoin, Ethereum, and many other cryptocurrencies have revolutionized the financial industry, but there is a significant risk. Market trends and moves in the crypto world are unpredictable there.

Therefore, a lack of significant oversight may result in devastating results. Frauds, security breaches, and market volatility have accounted for the loss of billions of dollars here.

Likewise, many crypto holders are being sued for various reasons, which cause great losses. They are entangled in a mess and trying to recoup losses in Court. Still, anything to predict in this regard is unpredictable, and it would need time and great patience to recover all losses and get back to success.

Tags: crypto losscrypto news
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Hania

Hania

Hania is a 30-year-old blogger who used to be a teacher before entering the world of writing. She is originally from India and has been writing blogs on various topics for 2 years now. Hania is particularly interested in exploring the intersections of finance, technology, and cryptocurrency. Her experience as a teacher has given her unique insights into the ways in which digital media can be used to facilitate learning and engagement. Through her writing, Hania hopes to share her knowledge and learning of crypto industry with everyone.

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