• Cryptocurrency exchanges being sued for fraud
• Class Action Suits
• Binance, Ripple, BitFinex Law Suits
• Why Lawyers Should Know about Cryptocurrencies and Cryptocurrency exchanges

Cryptocurrency exchanges being sued for fraud is not uncommon.  A cryptocurrency exchange is a business process, which permits customers to trade cryptocurrencies and digital currencies. In addition, it permits customers to trade cryptocurrencies for other assets like fiat money.

Cryptocurrency exchanges accept credit card payments, wire transfers, and other forms of payments in exchange for digital currencies or cryptocurrencies in the business process. A cryptocurrency exchange is a market maker that typically takes the bid-ask spread as a transaction commission for its service or.

There are investors, partners, and regular traders in the cryptocurrency space.  Disputes for fraud, remittance issues, legal enforcement, regulators cracking down on cryptocurrency exchanges, and nations banning transactions are not uncommon.  Many times cryptocurrency trading and investments go wrong.

For instance, when there are technical issues and there is a massive sell-off, the price of the crypto can go haywire, and a bunch of investors can go mad over their losses.  There have been a lot of such instances.

There have been instances where investors file class-action suits against cryptocurrency exchanges.  A class-action lawsuit is a legal action, which has been filed by more than one individual versus a single defendant (cryptocurrency exchange). These suits are designed for situations where several people have suffered similar injuries due to the action of a defendant. Class action lawsuits are appropriate when the damages claimed by each plaintiff and the person who is alleging wrongdoing are minimal for individual claims to be worthwhile.

Class action suits are commonly filed against government entities, manufacturers, retailers, employers, and financial institutions. For example, cryptocurrency exchanges are financial institutions, and therefore, they can be subject to a class-action suit.

Of note, Bloomberg News previously reported that Binance was under investigation by the United States Department of Justice and Internal Revenue Service for money-laundering and tax evasion.

In June 2021, Binance was ordered by the U.K.’s Financial Conduct Authority to stop all regulated activity in the United Kingdom.

A class action was filed against Ripple in May 2018, “alleging that it led a scheme to raise hundreds of millions of dollars through unregistered sales of its XRP tokens.” According to the complaint, “the company created billions of coins ‘out of thin air and then profited by selling them to the public in ‘what is essentially a never-ending initial coin offering.

With Bitfinex, in 2015, the exchange’s customers were hacked, losing about $400,000, and in 2016 about $73 million more was stolen from its customers’ accounts. The exchange’s access to U.S. dollar payments and withdrawals was then curtailed.

These are just a few sample citations.  The scope for cryptocurrency-related lawsuits is immense, with markets maturing and several traders becoming a part of high-frequency trading.  More money, more funds, more institutions are entering crypto.  Thus, Lawyers need to know about the functioning of the cryptocurrency space and cryptocurrencies to help victims sail through legal suits.