Blockchain and the Law

Category Archives: Litigation: Civil

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Fraud Claims Against Token Issuer Dismissed Based on Disclosures to Accredited Investor

The organizers of an initial coin offering (ICO) recently won dismissal of an investor’s fraud claims by establishing that their public risk disclosures negated the investor’s claims of reliance on alleged misstatements.  The project, a video service provider’s ICO, was governed by a purchase agreement called a “Simple Agreement for Future Tokens” (“SAFT”).   The plaintiff … Continue Reading

Crypto Exchange Obtains Favorable Ruling in Arbitration of Claims over Alleged Trading Losses

This past month, a California district court granted a motion to compel arbitration of various claims by customers of cryptocurrency exchange platform, Coinbase Global, Inc. (“Coinbase”), finding that Coinbase’s User Agreement, which contains a broad arbitration provision, including a delegation clause that delegates questions of arbitrability to the arbitrator.  (Donovan v. Coinbase Global, Inc., No. … Continue Reading

Consumer Law Claims against French Crypto Asset Wallet Provider May Proceed in California Court

Customer lists held by providers and the personal information users enter to obtain digital wallets or set up crypto exchange accounts are enviable targets for hackers.  Such data can be used to launch targeted phishing schemes and related scams to trick holders into divulging their private keys or else unknowingly transferring anonymized crypto assets to … Continue Reading

App Store Protected by CDA Immunity (and Limitation of Liability) for Losses from Fraudulent Crypto Wallet App

Background The issue of fraudulent crypto-related mobile apps has received much attention of late.  Back in July 2022, the FBI issued a notice, warning financial institutions and investors about instances where criminals created spoofed cryptocurrency wallet apps to trick consumers and steal their cryptocurrency. There have also been reports of phishing websites that attempt to … Continue Reading

Blockchain Meets Morrison: Court Rejects Blockchain Class Settlement Because of Concerns About Adequacy of Representation

The U.S. District Court for the Southern District of New York recently rejected a proposed settlement of a securities class action involving purchasers of digital tokens due to concerns about whether the lead plaintiff had adequately represented the class for settlement purposes.  Judge Lewis A. Kaplan held in Williams v. Block.one that the federal securities laws did not … Continue Reading

As NFTs Blur the Line Between “Receipt” and “Product”, Trademarks Owners Fight Over New Virtual Markets

Last month, our post about art NFTs and the DMCA highlighted the distinction between non-fungible tokens and the copyrighted works they represent. In the context of copyright, this dichotomy is generally uncontroversial: In most cases, an NFT merely points to an underlying work but does not contain a copy of the work it represents, and … Continue Reading

Crypto Chaos: EthereumMax Executives, Kim Kardashian, Floyd Mayweather, Jr., and Paul Pierce Sued in Cryptocurrency Advertising Class Action

Cryptocurrency, social media, and celebrity or influencer endorsements have all been top of mind recently, including for advertisers. A newly filed lawsuit is asking a federal court to consider the intersection of these areas, with potential implications for advertisers looking to expand into the cryptocurrency space. EthereumMax executives (“Executive Defendants”) and a few well-known celebrities, … Continue Reading

Court Sides with SEC in Ruling to Prevent Telegram from Distributing Grams

In the latest development in the ongoing dispute between the SEC and Telegram Group Inc. (Telegram), Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York in a March 24, 2020 opinion granted the SEC’s motion for preliminary injunction to prevent Telegram from distributing Grams purchased in its initial … Continue Reading

Lawsuit Alleging that LATX Tokens are Securities Survives Motion to Dismiss

On December 10th, 2018, a U.S. District Judge for the District of New Jersey denied Latium Network, Inc. (“Latium”) and its co-founders’ motion to dismiss a class action alleging violations of Section 5 of the Securities Act of 1933 (the “Act”) for offering and selling unregistered securities in the form of Latium X (“LATX”) tokens.… Continue Reading

First Decision in Class-Action Context Concludes Digital Tokens Can Be Securities

For digitally savvy investors itching to know whether U.S. courts would treat crypto-tokens as securities subject to the regulatory requirements of the Securities Act of 1933, the wait is over—sort of. The first federal judge to decide the issue in the class-action context landed on the same side as the SEC did back in 2017, … Continue Reading

Ripple Faces Class Action Lawsuit Alleging Sale of Unregistered Securities

A class action lawsuit was filed on May 3rd against Ripple Labs Inc.—a fintech startup that controls the third-largest cryptocurrency in the world—and its CEO Brad Garlinghouse, alleging that Ripple sold unregistered, non-exempt securities in violation of federal and California state securities laws. In their complaint, Plaintiffs characterized the sale of XRP (Ripple’s native token) … Continue Reading

FTC Freezes Assets and Operations of Four Promoters of Cryptocurrency Investment Schemes

The Federal Trade Commission (FTC) recently sought and received a temporary restraining order (TRO) against four promoters of alleged pyramid schemes involving cryptocurrencies. The promoters were charged with violating the FTC Act’s prohibition on unfair or deceptive acts or practices in or affecting commerce. The FTC’s complaint (filed under seal in the U.S. District Court … Continue Reading

Alleging Fraud, SEC Shuts Down AriseBank’s Celebrity-Endorsed ICO of Purported “Decentralized Bank”

In its latest effort to combat scams in the initial coin offering (ICO) space, the SEC announced today that it has obtained a court order cutting off AriseBank’s ICO of “AriseCoin” tokens, appointing a receiver over AriseBank and freezing AriseBank’s and its co-founders’ digital and other assets. The SEC’s complaint against AriseBank and its co-founders … Continue Reading

U.S. Court Orders Coinbase to Share Information about Account Holders with the IRS but Limits to Transactions over $20,000

A U.S. federal district court judge on Tuesday, November 29 ordered Coinbase Inc., the largest cryptocurrency exchange and storage platform in the world, to provide information about certain of its account holders to the U.S. Internal Revenue Services (IRS).  Information pertaining to as many as 14,355 account holders and 8.9 million transactions could be covered … Continue Reading

Third Class Action for Tezos ICO

For the third time this month, the Tezos blockchain project is the subject of a class action complaint for claims arising from their $232 million July initial coin offering (“ICO”). Consistent with both prior lawsuits, the plaintiffs allege that the Tezos ICO constituted the unregistered, non-exempt offer and sale of securities in violation of the … Continue Reading
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