Class Action Looking For More Members
Binance, as well as multiple other large cryptocurrency firms, have been named in a series of recent class-action lawsuits that could cost the company billions of dollars. Eleven lawsuits have been brought forward by Roche Cyrulnik Freedman against some of the crypto space’s biggest names. When commenting on the lawsuits, Kyle Roche of Roche Cyrulnik Freedman explained the lawsuits by saying that in the many offering of initial coins (ICOs), which sent investors in droves, all hoping to find the next Bitcoin, the crypto issuers and exchanges failed to comply with state and federal securities laws.
He added that the class action cases are looking for new members to join them as they build their case. Qualifying is anyone who purchased any tokens or did business with any of the defendants named in the class action, and investors should reach out to the firm to be added to the case.
Billions of Dollars At Stake
Most of the processes are still generally centralized according to an anonymous source familiar with the matter at hand. The crypto exchanges and issuers had a method to their madness and focused on “pre-minted” assets, rather than cryptocurrencies which employ mining.
The same source cited Willian H. Hinman of the Division of Corporation Finance division of the SEC, who stated that Ether (ETH) might not qualify as a security as it is too decentralized. The plaintiff also is likely to be stuck in litigation for 3 to 4 years as the monetary damages are discussed. However, those damages, while hard to put a figure on, are likely to be in the billions. After all, Binance alone did billions of dollars of business just themselves.
Binance’s Past Might Catch Up With Them
Currently, Binance offers 802 trading pairs, with most of the available assets representing ERC20 as well as other pre-minted tokens. Back in 2017, Binance issued its own ERC20 token, named the BNB. Around that same time, Binance hosted its first IEO (Initial Exchange Offering) and have since developed and established a platform called Binance Launchpad, dedicated to this activity.
Binance stopped serving US residents in 2019, so if any of their previously available assets end up retroactively classified as securities, the plaintiffs may have a great chance in the courts.
Binance V. Binance.US
Binance.US had a different approach to the U.S. market, and it could potentially work against them, and in favor of the plaintiffs. They are a U.S. based entity and have no legal affiliation with Binance. As such an entity they must be fully compliant with the U.S. state and federal regulations and rules. It’s one of the main reasons Binance.US is not serving clients in certain states.
Binance.US, unlike Binance, offers only 30 digital assets to U.S. customers, and they have developed a framework with the main goal being to achieve legal compliance.
The only defendant to meaningfully respond to inquiries on the matter was Bibox, whose customer rep told Cointelegraph that they are running a crypto trading service and cryptocurrencies, not securities. They are also seeking a secure legal option in this case. The other defendant either did respond or claimed to have no comment on the matter.
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