According to a new study in the US, the number of ICO and cryptocurrency-related lawsuits currently in federal courts is at seven. These coming in the first half of 2018 is already a two times increase when comparing to last year’s figures. The study became available to the press on Wednesday. It stated that 2017 was the first time ICO-related lawsuits made an appearance stateside.
Lawsuits’ Analysis
The report explains that of the seven lawsuits initiated in 2018, six were active. According to CoinShedule, ICOs, which are fundraisers used chiefly by blockchain-based startups for funding innovative businesses, have already attracted over $17 billion in 2018. This figure represents an increase from $3.7 billion in 2017 as well as $95 million in 2016.
Breaking The Report Down
Ripple Labs has three outstanding class action lawsuits against it in a federal court. The company is receiving accusations of selling unregistered Ripple tokens (XRP) to investors. Those investors are now turning around and sueing the company for selling misleading products.
Another cryptocurrency taking a conspicuous position is BitConnect. It ran an ICO which promised high returns every day, but failed to keep the promise. The company is in court for deceiving people and defrauding them of their hard-earned money. The summary shows that other cases include Cloud With Me, DRIP, Paragon Coin, and Latium Network.
Establishing A Pattern
In the heat of the ICO frenzy, more ICO-related lawsuits are becoming the order of the day. This suggests that a sizeable number of the ICOs out there are scams. Also, the increase in ICOs translates to an appreciable increase in the number of class action lawsuits, the report states. Additionally, the report notes that from 2016 to date: there are over 750 fed securities lawsuits, which is the highest in a space of two-year since 1995. One of the major contributors of the report was a former SEC commissioner and professor of Stanford Law School, Joseph Grundfest.
Fiat Currency Market
In relation to the government-issued currency market where shares trade, Professor Grundfest said that class actions as a result of frauds continue to impact the sizable number of publicly traded firms. He chipped in that if first half of 2018 observable trend continues unchecked through the end of the year, nearly 8.5% of the publicly traded companies on New York Stock Exchange (NYSE) and National Association of Securities Dealers Automated Quotations (NASDAQ) markets will have their chief executives answering to class action lawsuits.
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