According to MaltaToday report, a coordinated strike by a US law firm against some of the best-known companies in the cryptocurrency industry has also targeted Binance, the word’s leading crypto exchange. The 11 lawsuits have named 42 defendants in more than a dozen countries. The lawsuits allege that these crypto companies took advantage of the market’s lack of understanding of how cryptocurrencies worked to sell these alleged illegal securities to citizens. The lawyers described the ICOs as a ‘Wild West’ where investors are left to fend for themselves in a lawless industry.
“The issued tokens were securities under federal and state securities laws.”
The law firm claimed that in 2017 and 2018, at the height of this frenzy of activity, hundreds of ICOs raised nearly $20 billion with virtually no regulatory oversight or guidance to investors. Crypto exchanges such as Binance, preying on the public’s lack of familiarity with the technology underpinning these tokens, characterized these tokens as ‘utility tokens,’ were in effect bets that a particular project would develop into a successful venture, the law firm noted. The issued tokens were securities under federal and state securities laws, the firm alleges.
The plaintiffs seek damages from crypto companies for selling unregistered securities.
The plaintiffs are seeking damages from crypto companies for selling tokens that are not securities under US federal law. The damages being sought are not quantified in the actions. Crypto exchange Binance has not commented on the lawsuit yet. The lawsuit against Binance alleges that the crypto exchange sold securities without a license and that, like the other defendants, wrongfully engaged in millions of transactions without registering the tokens as securities with the US SEC.
The lawsuit further notes that Binance issued unregistered securities without registering itself as a broker or exchange with the SEC. The plaintiffs allege that the promises of new products and markets by these crypto companies went unfulfilled, with investors losing when these tokens crashed, now at a tiny fraction of their 2017-2018 highs. The US SEC had already filed lawsuits against several blockchain companies for conducting unlawful ICOs.