As was reported earlier today, the law firms of Roche Cyrulnik Freedman and Selendy & Gay filed a squadron of class action lawsuits targeting multiple crypto exchanges as well as token issuers. The two firms targeted four exchanges, including Bitmex and Binance as well as ICO issuers including Block.one (EOS) and Tron (TRX). The shotgun legal approach at a minimum raised an eyebrow or two in the COVID-19 dominated news cycle.
Later in the day, Crowdfund Insider received a comment on the lawsuits from Alexander S. Blum, COO of Two Prime, a Fintech company focused on the financial applications of crypto. Blum said the class action lawsuits certainly caused a stir foreseeing a legal battle that will play out for years in the courts:
“The class action lawsuits will play out in one of two ways: One way is that since the cases will be determined by U.S. courts, it will force precedence on what constitutes as a securities offering, who is responsible for it, and under what jurisdiction. The lack of clear-cut rules can be frustrating from the entrepreneur’s perspective and hopefully, crypto companies will have more clearly defined rules about how to conduct themselves moving forward,” predicted Blum. On the other hand, there are also companies that may not want to deal with the hassle of a lawsuit and may want to settle out of court. That is part of the bet the law firm is taking — that there may not be any legal decision, but the law firm will get a piece of the settlements. Whether these different exchanges or token issuers will choose to fight it or settle, it’ll depend on the company and their resources.”
Blum noted that while some of the plaintiffs are US based, several are not so much like Tron or KuCoin. Any legal jousting will be closely watched. Of course, both state and federal regulators have already displayed a willingness to pursue digital asset issuers regardless of their home jurisdiction. All it takes is an investor based in the US.
Blum believes that for these international firms based outside the US “it’ll be interesting to see whether the U.S. courts will be able to enforce their decisions and how this all plays out.”