Business New lawsuits filed against tokens and cryptocurrency exchanges in...

New lawsuits filed against tokens and cryptocurrency exchanges in New York |

The New York Southern District Court has filed 11 lawsuits against cryptocurrency firms, including the Binance, Tron Foundation, and KuCoin, for allegedly violating securities laws.


Eleven new class action lawsuits were filed April 3 by the Roche Freedman law firm in the Southern District of New York Federal District Court. Individual complaints include Binance, Civic, BProtocol, Status, Block.one, KayDex, Quantstamp, BiBox, TRON Foundation, KuCoin, HDR Global Trading, as well as CEOs of several companies, including Brendan Blumer, Dan Larimer (Dan Larimer), Vinny Lingham (Vinny Lingham) and Changpan Zhao (Changpeng Zhao).

The plaintiffs are Chase Williams, Alexander Clifford, and Eric Lee. The complaint alleges that firms violated U.S. federal securities laws by issuing tokens and / or illegally selling them to U.S. residents. Complaints against company executives fall under the responsibility of the “controlling entity” and its obligation to enforce securities laws.

Claims are filed against 11 companies, most of which are located outside the United States. To summarize the content of the claims, the key component is the allegations of unregistered issuance of token shares and / or their sale to American investors. In addition, exchanges may be liable for the sale of securities as unlicensed brokers-dealers if the tokens in question are ultimately identified as securities.

So, for example, a lawsuit against the KuCoin exchange says that the complaint was filed on behalf of investors who purchased ten digital tokens on the site. KuCoin has been selling them since September 2017 without registering as a broker-dealer or exchange license. The list of sold tokens mentioned EOS, SNT, QSP, KNC, TRX, LEND, ELF, CVC and TOMO.

If the court determines that any of these tokens is a security and was sold to KuCoin, which did not have the relevant permissions, the exchange may suffer losses and become the subject of inspections by regulators. Similar charges were brought against Binance that all the listing agreements that the exchange entered into with token issuers were implemented in violation of the Exchange Act, and also without registering as a broker-dealer.

The lawsuit against the Tron Foundation disputes the similarity of TRX with BTC, and argues that the token was issued and controlled by the defendants in a completely centralized manner, and also constitutes a security:

“… the creation of TRX tokens, therefore, took place as part of a centralized process, unlike Bitcoin and Ethereum. This, however, was not obvious when selling tokens to investors. Thus, buyers were misled into believing that TRX is not a security. ”

Recall that recently, a New York court banned the distribution of Gram tokens to non-residents of the United States. The court rejected a Telegram request, in which the company asked for clarification whether the ban on the distribution of Gram tokens applies to investors from other countries that are not subject to US securities laws.

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