Order in the Court: How The Crypto Industry Seeks Justice Through Lawsuits

Order in the Court: How The Crypto Industry Seeks Justice Through Lawsuits

In the face of the US’ lack of regulatory clarity, lawsuits are shaping the future of crypto legislation.

Last month, a report by legal analytics firm Lex Machina revealed that the number of lawsuits mentioning the words ‘cryptocurrency’, ‘bitcoin’, or ‘blockchain’ this year has already increased 300 percent from the number of similar cases filed in 2017. 15 such cases were recorded last year; at least 45 are on record in the United States this year, and the number is on track to increase.

Several common themes run through these cases. Many of them are addressing fraudulent activity intended to maliciously harm unsuspecting customers; others have been brought by the SEC and other regulatory bodies to address companies attempting to sell unregistered securities. Some are the result of corporate partnerships gone bad, and others still seem to have been caused by bad cases of buyer’s remorse.

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This rise in securities-related lawsuits has not been unique to the cryptosphere, however. A report published by Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research earlier this year said that “plaintiffs have filed more than 750 federal securities class actions since midyear 2016–the most prolific 24-period since enactment of the Private Securities Litigation Reform Act of 1995.”

Because of how new the cryptocurrency industry is, the relationship between where regulations end and private lawsuits begin is somewhat unclear.