As the Biden administration ramps up its scrutiny of the cryptocurrency industry, a handful of small litigation shops are piling up class actions agai

Crypto Lawyers Bet Big on Class Action Lawsuits as Market Slides (1)

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2022-09-22 01:30:06

As the Biden administration ramps up its scrutiny of the cryptocurrency industry, a handful of small litigation shops are piling up class actions against crypto exchanges and digital token issuers, pursuing theories that could shape how decades-old laws apply to the emerging field.

Led by partners from boutique firms, lawyers have filed 58 securities class actions against crypto companies since 2016, according to a report from the consulting firm Cornerstone Research and Stanford Law School.

More than one-third landed in the past two years, and the pace surged in the first six months of 2022, when the industry’s market capitalization fell by $2 trillion before stabilizing.

Many of the complaints—targeting entities including Coinbase and Binance, two of the world’s largest crypto exchanges—allege that the trading platforms, coin issuers and other firms are shirking disclosure requirements mandated by federal securities laws and that they should be on the hook for investors’ losses.

“There was a crash and a lot of the excesses and abuses started to come to light,” said John Jasnoch, a partner at the firm Scott & Scott, which is litigating seven proposed crypto class actions.

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