What are the Chances of Recouping Cryptocurrency Losses in court?

Investors are trying to recover their losses in a U S court following a downturn in cryptocurrency prices and the crash of one stablecoin Here are some of the challenges investors may face in cryptocurrency litigation

What is the Lawsuit About?

Individuals who promoted cryptocurrencies, as well as companies that created them, have been sued According to Kyle Roche, who represents cryptocurrency holders in several lawsuits, U S claims over cryptocurrency often involve alleged violations of federal securities and commodities laws, which prohibit fraud and manipulation and require registration of products and operators In the latest lawsuit, Terraform Labs, the company behind Terra USD, is accused of causing the collapse of their stablecoin

On June 17, a cryptocurrency investor sued the Seoulbased company and Chief Executive, Do Kwon, alleging they failed to register Terra USD's digital assets as securities and defrauded investors through several

Venture Capital Funds

According to a Terraform Labs spokesperson, "The claims are unfounded."

One of the world's largest stablecoins, Tether, is being accused of rigging cryptocurrency markets in a lawsuit filed in New York. In addition, Ripple, the company behind XRP, has been sued for selling unregistered securities in California

Motions to dismiss both lawsuits were denied

In response to the allegations, Ripple said it disputes them and will defend itself A request for comment from Tether was not responded to� Investing in cryptocurrency exchanges has also been a target for investors looking to recover losses

According to investors, Binance U�S� falsely marketed TerraUSD as a safe asset before it collapsed on June 13� Coinbase was accused of selling 79 digital assets as unregistered securities in March�

Allegations Have Been Denied by Binance and Coinbase.

Celebrities who have publicly endorsed cryptocurrency

are also being sued by investors Reality TV star

Kim Kardashian and boxing legend Floyd Mayweather Jr have been accused of pumping and dumping cryptocurrency A request for comment was not responded to by Kardashian or Mayweather

Obstacles in the Legal System

Several lawsuits brought in 2020 against exchanges, alleging they fueled an illegal boom in digital coins, failed after judges dismissed them as too late or lacking a connection to the U�S�

For newer lawsuits, timing should not be an issue, but cryptocurrency holders could still face obstacles when suing overseas companies in the United States Singapore-based exchange KuCoin won a default judgment against token holders in New York after a Singaporean court refused to require it to provide information

The investor will also have to show that their tokens qualify as securities or commodities under securities or commodities laws There have been some court rulings that certain cryptocurrencies fit the bill, but the issue remains unresolved The process of going after exchanges may pose additional obstacles for cryptocurrency holders

According to Coinbase, private litigants cannot enforce registration requirements against the exchange since Coinbase is not a party to the transactions

Has Anyone Ever Won?

SEC settlements have reclaimed some funds for investors in a handful of digital assets, while many cryptocurrency lawsuits are still pending Investors may still lose out even after a settlement because they face long delays

Last year, blockchain company Block one and token holders reached an agreement, alleging that it had violated securities laws According to court filings, more than 100 token holders filed claims worth more than $75 7 million Final approval of the settlement has not yet been granted —Crypto Weekly

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