Cryptocurrency lawsuits increased threefold in the first two quarters of 2018 compared to the whole of last year.
This is according to a report prepared by Lex Machina, a legal analytics firm. Last year, the number of cases mentioning bitcoin, cryptocurrency or blockchain amounted to just 15 ,but in the first and the second quarters of this year, the figure has risen to 45. If the current trend continues, this means that the increase will likely be more than sixfold by the end of the year.
New Sheriff in Town
Of all the cases that have been filed so far in 2018, the U.S. Securities and Exchange Commission was responsible for around a third, according to the National Law Journal. This coincided with the current chairman of the SEC, Jay Clayton, announcing a crackdown on the sector. Clayton was nominated to the position in January last year though he was formally inducted five months later.
The surge in the number of cases seems to have also coincided with the fall in the price of bitcoin and other cryptocurrencies from their record highs. Specifically, there were only seven cases relating to bitcoin, blockchain or cryptocurrency in the fourth quarter of last year but this more than tripled in this year’s first quarter.
“[T]he first two quarters of 2018 saw a significant rise in the number of securities cases relating to cryptocurrency or Bitcoin,” the legal analytics firm wrote in a statement. “Using Legal Analytics’ keyword search functionality, Lex Machina discovered case filings relating to this emerging area surged from seven cases in Q4 2017 to 22 cases in Q1 2018 Q1 and 23 cases in Q2.”
Among the high-profile firms in the crypto space, Ripple Labs and Bitconnect are among the companies facing lawsuits in the United States. Recently, Ripple got a reprieve in one of the lawsuits after it managed to reach a settlement with blockchain tech firm R3, as CCN reported.
The dispute between the two firms came after the severance of a partnership deal which had allegedly stipulated that R3 would have the right to acquire XRP tokens totaling up to five billion at a price of US$0.0085 per unit till the end of next year. At the beginning of the year when XRP tokens were trading at nearly US$4 per unit, the value of the legal dispute was approximated to be close to US$20 billion.
In the case of Bitconnect ,which has been accused of running a Ponzi scheme, one of the lawsuits against the firm was filed in the state of Kentucky in January this year. This was after being issued with cease-and-desist orders in North Carolina and Texas.