Seven class action lawsuits associated with initial coin offerings (ICOs) and cryptocurrencies have been filed in the US during the first half of this year, up from five similar cases registered during the whole of 2017, a report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse (SCAC) showed on Wednesday. ICO-related federal lawsuits initiates first appeared in 2017.
The paper shows that six of the seven crypto-related class actions filed in 2018 so far are currently active. ICOs, which are used chiefly by tech startups to get funding for promising innovative projects, have managed to attract almost $17 billion this year alone, up from $3.7 billion in 2017 and $95 million in 2016, according to CoinSchedule data.
Some of the ongoing ICO-related class actions refer to Ripple Labs, which is alleged to have collected hundreds of millions of US dollars via the unregistered sale of Ripple tokens (XRP) to retail investors. Elsewhere, Bitconnect faces a lawsuit in which it has to explain why it had failed to prevent and report on the collapse of its coin. Other cases filed in 2018 relate to DRIP, Latium Network, Paragon Coin, and Cloud With Me.
While the ICO frenzy hit the market last year and is still continuing, it is worth mentioning that the growth in ICO and crypto-related class action lawsuits go in hand with an increase of class action securities lawsuits in general. Starting with mid-2016, there have been filed over 750 federal securities class actions, which is the highest figure for a two-year period since the Private Securities Litigation Reform Act of 1995, the report notes.
Joseph Grundfest, a Stanford Law School professor and former commissioner of the US Securities and Exchange Commission (SEC), commented on the report, which he co-authored:
“Class action securities fraud litigation continues to affect a large percentage of publicly traded firms.”
“If the trends observed in the first half of the year continue to year-end, approximately 8.5 percent of all companies listed on the NYSE and NASDAQ markets will have been sued in these cases,” he added.
This article appeared first on Cryptovest
