A number of companies and individuals in the field of Cryptocurrency exchange faced a flood of accusations and lawsuits in federal court in New York on Friday.
On April 3, eleven lawsuits were filed by Roche Freedman, a law firm in New York’s Southern District, according to Cryptoblock. These cases have been filed against large companies such as Binance, Civic, KuCoin, Status, HDR, Tron Foundation, BProtocol, Block.one, BiBox, and several others. Many companies and individuals who have collaborated with these letters have also filed complaints, including Brendan Blumer, Dan Larimer, Vinny Lingham, and Chang Peng Zhao. Cited.
You may have heard of Friedmann’s legal firm in the case of Craig Wright and Bitfinex. In both cases, the company sought to prove the allegations to the other party. OffShoreAlert was the first website to publish this information, calling it a “bloody wedding.” The letter refers to an excerpt from the George RR Martin series of books on the song of fire and ice, written by George R. R. Martin.
Chase Williams, Alexandeer Clifford and Eric Lee have been named as the main plaintiffs in the case. According to the registered complaint, the suppliers of the tokens and all the exchanges that sold these tokens to American customers are accused of violating state and federal securities laws. The charges against the individuals are under the “entrepreneurial” theory and attribute responsibilities to them in the area of securities laws. Such accusations are usually made when it is assumed that the manager of a company was primarily responsible for violating the law.
Of those, some may not be inside the United States and its jurisdiction, which is sure to be a source of controversy. It is also important to note that the detailed description of the files is, in a nutshell, time-consuming, and we will only describe their generalities. Simply put, Friedman’s complaint states that the tokens and how they were presented to Americans were recognized as securities.
Some exchanges operating outside of the United States may claim that they do not take much responsibility because they have barred Americans from operating on their platform. Such cases have been repeatedly opened in the legal circles of the world, but we have never witnessed such a large scale of them. In addition, if it is ultimately determined that the tokens were a type of securities, the exchanges will also be recognized as unlicensed, criminal brokers and will be required to pay damages to individuals and their customers.
For example, in the event of Friedmann’s victory in the Cocoin case on behalf of investors who have purchased tokens from the exchange since September 2017, he is responsible for selling all EOS, SNT, QSP, KNC, Tron, LEND, ELF, and CVC tokens. And TOMO will be in charge of the exchange and will be required to pay damages to investors. Suppliers also face challenges and may face fines and even damages.
If the tokens are recognized as securities since Coco is not licensed as an official broker in the United States, in addition to the heavy damages it will be required to pay, it will face a number of other problems, as it will continue to do so. , The target of the legal authorities in the field of securities and they will definitely come to this exchange for further investigation. Similar cases have been opened in connection with the Binance Exchange. Binance is accused of acting as an unlicensed agent in the United States. On the other hand, the agreements signed by Binance with the suppliers of tokens are also a violation of paragraph five of the Stock Exchange Law.
Other lawsuits filed against the Tron Foundation state that the Tron bears no resemblance to Bitcoin and is managed by a person who has a case in the judiciary and is controlled in a completely centralized manner. In part, we read a letter to the court:
Unlike Bitcoin and Atrium, Tron tokens are created through a centralized process. However, such a case does not reach the usual investor. Rather, after a long time and the disclosure of additional information about the supplier’s intent, it is the process of management and success in decentralization that the buyer realizes that he has been able to buy securities. Buyers are convinced that Tron is not a security, but a security.
Certainly, in the press statements of the individuals and companies who have been sued, they will deny the allegations, but when we look at them more closely, the current situation is not so clear and has its own complexities.
In recent weeks, the Telegram Court and the US Securities and Exchange Commission have made a lot of noise. In the latest development in the case, a New York District Court judge has ruled that Telegram does not have the right to supply gram tokens until further notice. According to the US Securities and Exchange Commission, the gross supply to investors is the supply of securities and must be dealt with in accordance with existing laws.
Without judging the final results of these cases, it can be predicted that it will be very difficult to prove that these tokens are not securities.
The main question is which judiciary is responsible for dealing with people outside the United States and the judiciary. There are various treaties in this regard that clearly state what will happen to such defendants. Another point is the summoning of these people, which has become more difficult now with the spread of COVID-19 disease.
Remember that the process of handling cases in the US federal courts is very slow. On the other hand, the problems caused by corona disease make this process slower than it is, but this problem will finally be solved. These cases may involve many lawyers for a long time, and other similar cases are likely to be filed.