April 4, 2020 at 8:03 pm UTC · 2 min read
Some of the most prominent crypto companies in existence are now facing a torrent of coordinated class-action lawsuits, which accuse them of issuing and selling unregistered securities to unsuspecting investors.
Although the size and scope of this lawsuit are notable and could ultimately draw the keen eye of regulatory authorities within the United States, one prominent crypto compliance attorney is now noting that the bulk of these lawsuits are likely to be dismissed due to the statute of limitations on the Securities Act.
Massive crypto companies targeted by a new class-action lawsuit
Per multiple breaking reports, the new lawsuit was filed by law firm Roche Cyrulnik Freedman in the Southern District of New York against 42 defendants spread out throughout a myriad of different countries.
In total, 11 crypto companies are being targeted by the lawsuit, which specifically states that the defendants took advantage of neophyte investors by claiming that tokens being sold were utilities, rather than securities – despite them knowing otherwise.
It further alleges that the companies used Bitcoin and Ethereum’s classification as non-securities to support this notion, despite knowing that these smaller cryptos would not pass the “Howey Test” – a method for determining whether or not an asset is a security.
Several prominent individuals are targeted by this lawsuit, including Binance CEO and founder Changpeng Zhao,