Recent statistics show that cryptocurrency lawsuits have skyrocketed when compared with last year’s numbers. Legal analytics platform Lex Machina has released its yearly securities litigation report, and the results show a strong trend towards cryptocurrency litigation, as the numbers have tripled from 2017 to 2018 alone.
There were only 15 cases related to the infamous bitcoin cryptocurrency or blockchain in 2017. Now in just the first half of 2018 there have already been 45. If this trend continues on there will be close to, or over one hundred cases total this year. This is a significant jump from prior quarters.
Jay Clayton, SEC chairman has been tough on crypto and announced a cryptocurrency industry-wide crackdown at the beginning of the year. 30 percent of all cases from 2018 related to initial coin offerings or cryptocurrencies were SEC-filed.
The rise in cases has been in direct correlation with the fall of bitcoin and altcoin prices as widespread buyers remorse kicked in. From the fourth quarter of 2017 to the first quarter of 2018, the number of lawsuits tripled according to Lex Machina.
Big cryptocurrency companies like Ripple Labs and Bitconnect are taking the hit, both facing massive high-profile lawsuits these past two years. The Ripple Labs lawsuit was brought against them by an enterprise blockchain startup R3 in a partnership deal gone sour. Ripple had promised to pay out in XRP tokens that had jumped in value so much that R3 ended up being owed nearly $20 billion.
Bitconnect, on the other hand, was under fire for being a Ponzi scheme. The company promised to refund all BCC loans, but by that point, the price had dropped so significantly that the payments were worth nothing. State regulators in Texas and North Carolina ended up shut down their exchange and lending business with cease-and-desist orders.
Cryptocurrency lawsuits will become only more common as years go by and important legal precedent is being set now. The rise in cases is not only because of Clayton’s SEC crackdown or crypto’s alleged nefarious nature. As more startups enter the cryptosphere and more and more people use the technology and get involved with blockchain technologies and Web 3.0 as a whole, there will be more related lawsuits.
