Lex Machina Legal Firm Shows Cryptocurrency Lawsuits Increased 3x in Past Year
Lex Machina, a legal analytics firm, released a report indicating the cryptocurrency lawsuits have increased threefold in the first two quarters of 2018. In 2017, there were 15 cases mentioning bitcoin and the figure has grown to 45 in 2018.
A third of cases were brought by the U.S. Securities and Exchange Commission, according to the National Law Journal. Some belief that litigation increased due to the new SEC chairman Jay Clayton, who had announced his intent to crackdown on the industry.
In addition, some belief that the increase of lawsuits was due to the decline in bitcoin prices and other cryptocurrencies from their highs. Lex Machine released a statement on its website stating:
[T]he first two quarters of 2018 saw a significant rise in the number of securities cases relating to cryptocurrency or bitcoin. Using Legal Analytics keyword search functionality, Lex Machine discovered case filings relating to this emerging area surged from seven cases in Q4 in 2017 to 22 cases in Q1 of 2018 and 23 cases in Q2.
One of the most high-profile cases involved Ripple Labs and Bitconnect. The two companies are facing suits in the United States. Ripple managed to settle one of its cases with a blockchain tech firm in R3, according to CCN. The dispute dealt with a partnership severance deal that had allegedly stipulated that R3 would have the right to acquire XRP tokens totaling five billion of of .0085 per unit until the end of the year. At the start of the year, XRP’s tokens traded at nearly $4 per unit.
As for Bitconnect, it has been accused of running a Ponzi scheme. Plaintiffs filed suit against the firm in Kentucky, following Bitconnect’s receipt of cease and desist orders in North Carolina and Texas.