- The notorious law firm Roche Cyrulnik Freedman filed 11 class action lawsuits against well-known crypto companies from 42 countries in the United States on Friday.
- Among the companies sued for compensation for the sale of non-registered securities are the TRON Foundation, Block.One (EOS), Binance and BitMEX.
In the state of New York, USA, 11 class action lawsuits were filed on Friday against exchanges and companies that develop cryptocurrencies in what looks like a coordinated strike against the crypto industry. The lawsuits were filed by Roche Cyrulnik Freedman, the same law firm that is accompanying the Kleiman estate’s lawsuit against self-proclaimed Bitcoin inventor Craig Wright and the market manipulation lawsuit against Bitfinex.
The class actions are brought against Binance, the TRON Foundation, Block.one (EOS) Civic, BProtocol, Status, KayDex, Quantstamp, BiBox, KuCoin and HDR Global Trading, the operator of the derivatives exchange BitMEX. In addition, the lawsuits explicitly name key executives of the companies, including Justin Sun, the CEO of TRON Foundation, Brendan Blumer, the CEO of Block.one, Vinny Lingham, the CEO of Civic, Arthur Hayes, the founder of BitMEX, and the founder of Binance, Changpeng Zhao.
In essence, all the lawsuits accuse the companies of violating U.S. securities law by issuing or selling unregistered securities. Both the issuers and the exchanges are accused of exploiting investors’ lack of understanding of how cryptocurrencies work. In addition, the companies are alleged to have disguised the obligation to register by promoting the cryptocurrencies as utility tokens and comparing them with Bitcoin and Ethereum, which are not considered securities by the US authorities.
The lawsuits against TRON, Binance and BitMEX
In detail, the individual complaints differ somewhat from one another. For example, the TRON Foundation is accused that the defendants, founder Justin Sun, CTO Zhiquiang Chen and the Tron Foundation have “sponsored, offered and sold” Tron securities, also known as TRX tokens, throughout the United States in violation of securities laws from June 2017 to the present.
[…] the creation of TRX tokens thus occurred through a centralized process, in contrast to Bitcoin and Ethereum. This, however, would not have been apparent at issuance to a reasonable investor. Rather, it was only after the passage of time and disclosure of additional information about the issuer’s intent, process of management, and success in allowing decentralization to arise that a reasonable purchaser could know that he or she had acquired a security. Purchasers were thereby misled into believing that TRX was something other than a security, when it was a security.
The lawsuit against HDR Global Trading, the operator of the derivatives exchange BitMEX, includes the allegation that it sold securities with EOS and the Status Token (SNT) without registering as a securities exchange. The BitMEX operator is also accused of price manipulation. In this regard, the complaint alleges that BitMEX used its proprietary trading desk to trade against its own customers. As an example, the lawsuit cites the notorious incident of the last Bitcoin crash, on March 12, when Bitcoin fell to USD 3,700 and BitMEX went offline.
BitMEX acts like a casino with loaded dice, manipulating both its systems and the market its customers use for its own substantial financial gain.
The lawsuit against Binance, on the other hand, does not involve price manipulation, but Changpeng Zhao and the exchange are accused of selling 12 unregistered securities, including EOS, Bancor Token (BNT) and Status Tokens (SNT).
Although no exact figures are known about the number of plaintiffs, the Binance lawsuit estimates the number at “tens of thousands”, with compensation being claimed for “millions of transactions” within the last three years.