Five proposed crypto class actions in NY over unregistered securities dismissed
Five proposed class-action lawsuits against crypto firms have been voluntarily dismissed without prejudice in New York federal courts — without costs or attorney fees to any party.
Quantstamp, Status Research, Civic Technologies, HDR Global Trading, and Kaydex are off the hook, however related cases are ongoing.
The five class-action lawsuits dismissed on April 27 are part of a batch of 11 filed by Law firms Selendy & Gay PLLCRoche Freedman a year earlier. The lawsuits accused several crypto firms of causing investor harm by selling digital assets that were allegedly unlicensed securities without brokerage licensing, misleading investors, and engaging in market manipulation.
However the plaintiffs were unable to provide strong evidence of damages caused to investors from the alleged sale of unlicensed securities, and two prior court rulings in favor of BProtocol and Bibox reportedly paved the way for the dismissals. Within days of the Bibox ruling, all five legal teams had flagged the decision to the judges overseeing their cases.
Cases against Binance, Kucoin, Tron and HDR Global’s Bitmex remain in play according to court filings.
In a blog post yesterday, Director of Marketing Nancy Li for decentralized identity firm Civic Technologies welcomed the end of proceedings:
“The dismissal of this case signals the end of a lengthy and hard-fought process for Civic. During the past year plus the company remained confident that we would prevail, not just on behalf of Civic, but in support of the crypto ecosystem overall.”
Li added, “Nonetheless, sometimes being on the right side of an argument is not enough (and we were right), so it is with a certain sense of vindication that we tick this one in the win column for Civic and for crypto.”
The ongoing case against China-based blockchain software developer Tron Foundation may end with similar results with claims the lawsuit was filed outside the statute of limitations deadline.
Tron filed a motion to dismiss the “fatally flawed” lawsuit on Dec. 15, arguing that plaintiffs failed to allege harm, and that they continued to buy TRX after the SEC released the April 2019 framework on securities.
“Had plaintiffs read the white paper, they would have seen that Tron warned that although TRX was not intended to be a security, future government oversight or regulatory actions could affect Tron and the TRX token, including the ‘price and stability’ of the token and its use on the blockchain,” the motion said.
Paving the way for this week’s dismissals was a securities fraud lawsuit against Israel-based Bancor over its BProtocol Foundation which was dismissed in February due to the plaintiff’s failure to show damages caused, with the court also citing a lack of personal jurisdiction.
Earlier this month the class action aimed at Bibox was thrown out, after the complaint was filed outside of the statute of limitations deadline, with the judge also noting the plaintiff lacked standing on claims against five tokens they didn’t purchase, and failed to show injury caused on other class members who did purchase the tokens.