Last year accounted for the highest number of crypto related lawsuits in a single year filed in the United States, totaling 41 claims.
- Since 2018 litigation involving cryptocurrency has steadily increased
- Most lawsuits were filed by the U.S. Securities and Exchange Commission (SEC)
Rise in U.S. Crypto Lawsuits Tracked Since 2018: Report
According to a recent analysis from hedgewithcrypto.com, there are variations in the number of U.S. cryptocurrency-related lawsuits filed each year, comparable to the price cycles experienced by cryptocurrencies. Despite a 40% increase in the study’s data between 2018 and 2022, there have been occasional dips between the peaks. A total of 41 lawsuits were filed in the United States in 2022, the year with the most lawsuits of any other.
Type of Crypto Lawsuits
Here are the most popular type of crypto lawsuits since 2018.
Unregistered crypto assets (53 lawsuits)
Unregistered crypto assets or offerings were the most prevalent problem in the cases against the cryptocurrency industry that the SEC filed during the previous five years. This criminality is a factor in nearly half of all lawsuits.
Initial coin offering fraud (12 lawsuits)
In an ICO scam, a coin will be issued without the fraudsters ever intending to use the investors’ funds for the coin; instead, they will take the funds for their use. The SEC has brought 12 actions related to fraudulent ICOs in the last five years.
Stealing investor funds and defrauding investors (10 lawsuits)
Similar to ICO fraud, stealing investor cash and deceiving investors was the third most frequent legal issue raised by the SEC. This may also present a phony or deceptive product or as a straightforward investment fund robbery.
Nondisclosure of payment for promotion of crypto (8 lawsuits)
One of the most notorious cryptocurrency-related cases is the nondisclosure of payment for promoting crypto items since it frequently involves renowned people. Until 2022, the cryptocurrency market, worth billions of dollars, had been rising. As a result, many prominent celebrities wanted a piece of the action. In a similar vein, celebrity sponsorship of cryptocurrency startups increased investor interest.
Fluctuation In The Number of Crypto Lawsuits
The researchers at hedgewithcrypto.com state, “In 2019, there was a 30% fall as the number of lawsuits dropped from 30 to 21.” “This was followed by a sharp rise of slightly less than 62%, to 34 instances in 2020, before a further decline to 28 cases in 2021. Finally, in 2022, there was a further rise (this time by more than 46%), with 13 more cases than in 2021.
The U.S. Securities and Exchange Commission (SEC), the nation’s primary products regulator, has been harshly cracking down on unregistered services and securities. Around 19 of the 2022 cryptocurrency lawsuits were filed by the SEC. The majority of cases in the cryptocurrency sector over the years—53 in total since 2018—have been concerning unregistered services and securities. Twelve lawsuits since 2018 have been related to initial coin offerings (ICO) fraud, while ten have been linked to theft or fraud.
Eight lawsuits were related to nondisclosure agreements or the illegal promotion of cryptocurrencies. In contrast, five of the total over the previous five years were related to making false and misleading assertions about bitcoin products. “One of the most well-known cryptocurrency-related lawsuits, which frequently involves celebrities, is the nondisclosure of money for the promotion of crypto items.” the research says.
Conclusion
After the FTX trading platform was destroyed in December, there was still another significant controversy. Sam Bankman-Fried, a former CEO, is currently free on $250 million bail while he awaits trial on several allegations that carry a possible 115-year jail sentence (Bankman-Fried has pled not guilty to all charges). This ongoing dispute, which has already attracted a lot of attention online, with commentators voicing varied opinions, has the potential to become the most significant case in the history of cryptocurrency legislation.
