Major Courts and Pending Lawsuits in the Crypto Industry
2023 was a busy year for government prosecutors and digital asset attorneys, with several crypto industry stakeholders currently facing pending lawsuits in the U.S. and other jurisdictions. As we enter 2024, it is clear that there will be another round of court battles and crypto defendants defending themselves against allegations of illegal activities.
The SEC’s “Regulation by Enforcement” Campaign
The U.S. Securities and Exchange Commission (SEC) launched a series of lawsuits against multiple crypto businesses, which some proponents have referred to as a “regulation by enforcement” campaign. According to SEC Chair Gary Gensler, most crypto assets qualify as securities and should be subject to existing financial regulations. He believes that the ecosystem is plagued with fraud and non-compliance.
CFTC’s Crackdown on Fraudulent Digital Asset Operators
The Commodity Futures Trading Commission (CFTC) has been actively pursuing legal action against digital asset operators accused of fraud and running Ponzi schemes. The CFTC has already recorded its largest-ever win, imposing a $3.4 billion fine on Cornelius Johannes Steynberg of Stellenbosch.
The Seven Crypto Cases to Watch
As unresolved litigation continues and enforcement actions roll out, there are seven notable crypto cases to keep an eye on:
Binance
Binance, the largest crypto exchange, recently reached a record-breaking $4.3 billion settlement with the CFTC, the U.S. Department of Justice, and the Treasury Department. However, the SEC is still suing Binance separately for breaking securities laws.
Celsius
Crypto lender Celsius is facing lawsuits from the CFTC and the SEC. Its ex-CEO, Alex Mashinsky, has been indicted on seven criminal charges, and his trial is scheduled to begin in September.
Coinbase
Coinbase was sued by the SEC for allegedly failing to register its exchange and providing illegal services to U.S. investors. The case will be heard in a Southern District Court of New York.
FTX
FTX founder Sam Bankman-Fried has been convicted on multiple charges, including fraud. A second trial may be held to address additional counts related to unlawful political donations and bribing foreign government officials.
Kraken
The SEC has accused Kraken of commingling customer funds and operating an unregistered securities exchange. Kraken CEO David Ripley maintains that the company does not list securities and plans to defend its position.
Ripple
Ripple had a partial victory in its legal battle with the SEC over XRP sales. The court ruled that XRP sales on exchanges were not unregistered securities, but institutional offerings were. Negotiations are ongoing to determine potential penalties for Ripple.
Tornado Cash
Tornado Cash, an Ethereum-based mixing service, was sanctioned by the U.S. Treasury for alleged money laundering activities. The co-founders and developers of Tornado Cash are facing legal action and deny the charges brought against them.
Hot Take: The Ongoing Legal Battles Shaping the Crypto Industry
The crypto industry is currently embroiled in a series of high-profile lawsuits, with major players like Binance, Coinbase, and Ripple facing regulatory scrutiny. These court battles will have significant implications for the future of crypto regulation and compliance. As a crypto enthusiast, it’s important to stay informed about these cases and their potential outcomes. The decisions made by the courts will shape the regulatory landscape and determine the level of accountability expected from industry participants. The year 2024 promises to be another eventful one for the crypto industry, as these legal battles continue to unfold.
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