A recent report by Fox Business has revealed that major Bitcoin and altcoin exchanges in the US could face a possible class action lawsuit from individual investors. The case will be led by Tom Grady, a longtime securities attorney recognized as one of the nation’s leading investment fraud attorneys. Here are the details…
Bitcoin exchanges could face a major lawsuit
Grady, through his Tampa-based law firm, is currently investigating Coinbase, Robinhood, Kraken, and other major crypto exchanges for potential violations of state and federal securities laws. The investigation focuses on exchanges’ transactions in cryptocurrencies, which are mostly considered unregistered securities by the SEC and therefore violate federal law. Grady believes that these exchanges may have misled investors by not providing adequate explanations about the risks of owning and trading unregistered crypto.
“We believe Coinbase, Robinhood and other exchanges are breaking the law, and investors who lose money by purchasing cryptocurrencies on their platforms may have the right to recoup those losses,” Grady said in a press release. While there has been no new comment from the exchanges, in the past these exchanges have argued that they operate legally and do not facilitate the trading of coins, which are considered unregistered securities by the SEC. Grady’s law firm is also looking for clients who have suffered losses when purchasing cryptocurrencies on these exchanges to share information about their investments.
Classification of cryptocurrencies has always been a big problem.
Classification of crypto assets has been a controversial topic in the crypto industry. cryptocoin.com As we reported, the SEC has filed a sanction lawsuit since 2017 for offering unregistered securities to various crypto companies. The SEC believes that the majority of cryptocurrencies are used for speculation or illegal activities. To determine whether a crypto is a unregistered security, the SEC uses the “Howey Test,” named after a 1946 lawsuit that determines whether investment contracts must be registered with the SEC.
Last month, the SEC sued crypto exchanges Gemini and Kraken for offering unregistered securities products to customers. Ripple, a digital cross-border payments company, is currently in legal battle with the SEC since 2020 over the sale of XRP tokens to help build its platform. Grady’s potential class action lawsuit against the largest US crypto exchanges could increase scrutiny over the $1 trillion crypto industry, which has recently suffered a significant drop in value and has been rocked by scandal.
The industry’s recent downturn, dubbed the “crypto winter,” continues as the Bitcoin price drops more than 50 percent from its all-time high. The recent announcement by Silvergate, a troubled crypto bank, that it is liquidating assets and shutting down operations is also putting further pressure on cryptocurrency prices. While most individual investors believe that crypto assets do not constitute securities; Grady’s possible lawsuit could result in more lawsuits against crypto companies.
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