As Crypto Losses Hit Investors, Litigation Picks Up

Lawsuits over cryptocurrency losses are mounting across the country, as investing in digital tokens and coins has become mainstream and the money at stake has increased significantly..

Even before the recent plunge in crypto prices, the industry already was seeing an uptick in lawsuits, which have come in several forms.

Many of the cases have been fueled by investors who allege some digital coins were hyped and sold under false pretenses.

Some proposed class-action suits allege pump-and-dump schemes involving celebrity promoters.

Others allege that some digital tokens are unregistered securities or that cryptocurrency issuers were deceitful in their marketing.

Collectively, the lawsuits speak to both the troubles and successes of a maturing industry.

‘‘We’re seeing all of the normal kinds of litigation that you would see in more traditional companies.

— Jason Gottlieb, a partner at Morrison Cohen

As lawsuits grow, firms that do defense work are seeing increasing demand for representation from crypto companies and trading platforms that want to avoid legal liability and regulatory scrutiny.

Facing a lightly regulated environment, some crypto investors have looked to courts to answer core legal questions for the industry,

such as whether digital tokens are securities that should be subject to the same regulations as stocks.