Crypto investors sue exchanges and insurers alleging security violations

A group of investors has filed class-action lawsuits against four crypto exchanges and seven insurers. Per the investors, the accused violated US securities laws by selling billions of dollars’ worth of unregistered tokens among other crimes. A report unveiled this news on April 6, noting that the group of investors filed 11 lawsuits in the US District Court in Manhattan on Friday, April 3.

Per the report, the lawsuits also named the executives of the companies. The defendants are crypto insurers Block.one, Tron, Bancor, Civic, Kybercoin, Quantstamp, and status, and exchanges Binance, BitMEX, Bibox, and KuCoin.

Commenting on these accusations, Block.one said,

“We are aware of the opportunistic complaints filed against several blockchain and cryptocurrency companies. We have not been served with any claims but are well prepared to address anything that may arise.”

BitMEX took a similar approach, noting that it was aware of the lawsuit and that it was reviewing it. However, the firm declined to comment further. On the other hand, Tron and Binance failed to immediately respond to requests for comment.

Failure to comply with federal and securities laws

According to Kyle Roche, a lawyer representing the investors, the aforementioned exchanges and insurers failed to comply with federal and state securities intended to shield investors against fraud.

In the court documents, the plaintiffs allege that the defendants profited from cash payments and transactions of insurers seeking to list their tokens on the exchanges. Purportedly, these profits exceeded often exceeded £811,530.

Phillipe Selendy, a partner at law firm Selendy and Gay, and one of the lead attorneys for the investors said,

“Not unlike the mortgage crisis that led to the Great Recession, the alleged pattern of misconduct by exchanges and issuers yielded billions in profits for wrongdoers through a basic betrayal of public trust,”

Block.one’s murky reputation

Prior to these complaints, the SEC charged Block.one with selling unregistered assets worth billions of dollars from June 2017 to June 2018. As a result, the regulator demanded that Block.one pay £19,492,800 in penalties.

Do you think unscrupulous behavior by incumbents in the crypto space could be the reason for the slow adoption? Share your thoughts in the comments section below.