Bitcoin launched in 2009 post the aftermath of the stock market crash that wiped billions of dollars in a jiffy. Pseudonymous founder Satoshi Nakamoto created BTC to be an independent financial entity away from the purview of the banks and authorities. The cryptocurrency markets were free from scrutiny and lawsuits from 2009 to 2019, but things changed thereafter. While the markets grew in leaps and bounds, all eyes were set on the digital asset industry while authorities try to bring in rules and regulations.
However, from 2020 onwards, lawsuits against cryptocurrency companies spread their wings. The first is the U.S. Securities and Exchange Commission (SEC) suing Ripple claiming that they conducted a $1.3 billion unregistered securities offering since XRP’s creation. The lawsuit is ongoing and an outcome is yet to be decided by the courts. The legal battle with the SEC stunted XRP’s price in the indices making it head south since 2021.
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Lawsuits Against Cryptocurrency Firms See A Rapid Increase
According to a study conducted by HedgewithCrypto, lawsuits slapped against cryptocurrency companies increased by 46% in 2022.
From 2018, a total of 105 lawsuits have been filed against cryptocurrency firms with the SEC. 2022 is the highest single-year total with 41 lawsuits, a sharp increase of 46%. The numbers include 19 SEC filings along with 22 class action securities lawsuits.
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In addition, the number of lawsuits spiked after the FTX collapse which made cryptocurrency firms come under the legal scanner. A handful of executives were also arrested for scams and are currently under investigation for fraudulent activities.
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The disgraced FTX founder Sam Bankman-Fried is out on bail with a $250 million bond. He faces several criminal allegations and if convicted, could face a jail term of up to 115 years. However, the outcome of the case might take a longer time than expected as it involves investigations across many countries.