Late last month, when Cornerstone Research released its report on securities class action lawsuit filings in the year’s first six months, it noted that an important first half development was the significant number of suits filed against cryptocurrency and other digital asset-related companies. The recent rise in the number of crypto-related securities suits undoubtedly is related at least in part to the turmoil in the marketplace for digital assets. Last week, the cryptocurrency exchange Coinbase became the latest digital asset company to get hit, as a plaintiff shareholder filed a securities class action lawsuit against the company and certain of its directors and officers. A copy of the complaint can be found here. In addition to the securities lawsuit, the same day a separate plaintiff shareholder filed a shareholder derivative lawsuit against the company as well. The derivative lawsuit complaint can be found here.
Continue Reading Coinbase Hit with New Securities Suit and Derivative Suit

The number of securities class action lawsuit filings in the first half of 2022 remained at the lower levels that prevailed last year and below the more elevated levels that prevailed during the period 2017-2020. Though the number of securities class action lawsuit filings in the year’s first six months is below the recent higher levels, the number of suits filed is still consistent with long-term averages. The difference in the number of filings so far this year and the elevated numbers during the recent period were both largely due to merger objection lawsuit filings patterns.
Continue Reading Pace of Securities Suit Filings in First Half 2022 Slightly Below Last Year’s Annual Level

From the outset of his time in office, SEC Chair Gary Gensler has made it clear that establishing oversight of crypto assets represent one his priorities. In a speech last week, Gensler said that agency will be “very active” in bringing digital currency under its investor protection framework, saying further that the digital assets will not mature if they are not brought under broad regulatory oversight. The regulator’s position is not restricted to mere words; a recent report shows that the agency has indeed been active in asserting its cryptocurrency oversight through enforcement actions. According to a recent report from Cornerstone Research, the agency has bought 19 enforcement actions related to cryptocurrency in the first nine months of 2021. The report, entitled “SEC Cryptocurrency Enforcement: Q3 2021 Update,” can be found here.
Continue Reading SEC Enforcement Activity Targets Crypto Assets

There have been several investment fads and mass enthusiasms this year that have been agitating the financial markets, but amidst the froth the fizziest speculative investments on the scene are non-fungible tokens (NFTs).  This new asset class uses blockchain technology to track tokens that are attached to verify the authenticity of everything from artwork to sports highlights. The boosters of these assets have mined the enthusiasm for collectibles to drive sky-rocketing asset values for NFTs. With this new type of asset attracting so much attention and activity, it arguably should come as no surprise that the backers promoting NFTs have attracted litigation as well.
Continue Reading Non-Fungible Token (NFT) Craze Leads to Securities Class Action Suit

In recent years, the SEC has established itself as an active cryptocurrency enforcement agency, according to a new report from Cornerstone Research. The report, entitled “SEC Cryptocurrency Enforcement: Q3 2013 – Q4 2020,” details that between July 2013 and year end 2020, the agency initiated a total of 75 enforcement actions and 19 trading suspension orders against respondents involved with digital assets. The report also shows that the agency’s cryptocurrency activity has steadily increased throughout the 2013-2020 period. A copy of the report can be found here. Cornerstone Research’s May 11, 2021 press release about the report can be found here.
Continue Reading SEC Establishes its Cryptocurrency Enforcement Credentials

Suresh Ellawala

As many readers may have noted at the time, in December the SEC filed an enforcement action against Ripple Labs and two of its executives in connection with what the SEC described as the company’s unregistered offering of securities, relating to the company’s sale of digital asset units between 2013 and the time of the filing of the enforcement complaint. In the following guest post, Suresh Ellawala takes a closer look at the issues that the SEC’s enforcement action presents. Suresh is Head of Commercial Financial Lines at Price Forbes & Partners. I would like to thank Suresh for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Suresh’s article.
Continue Reading Guest Post: The Ripple Effect – Are Cryptocurrency Tokens Securities, and Why Does it Matter?

Here at The D&O Diary, we make it our business to watch securities class action lawsuit filings as they come in, to keep an eye on filing trends as they develop. For example, recently we have been looking for coronavirus-related securities class action lawsuits. But while we were scanning the horizon for COVID-19 suits, something else unexpectedly materialized – all of the sudden, on April 3, 2020, a great big pile of cryptocurrency-related securities class action lawsuits were filed in the Southern District of New York. The filing of eleven total cryptocurrency-related securities suits in a single day is really unprecedented in my experience.
Continue Reading Plaintiffs File a Slew of Cryptocurrency-Related Securities Suits

Neil J. Cohen

One of the hot topics in securities regulation and enforcement has been the question of what position the SEC will take with respect to cryptocurrencies. In the following guest post written in the form of a one-scene play, Neil J. Cohen, a lawyer and publisher of the Securities Reform Act Litigation Reporter, imagines a fictional conversation involving an SEC official discussing cryptocurrencies. I would like to thank Neil for submitting his play to be a guest post on this site – this is the first play that has appeared on this site! I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Neil’s play.
Continue Reading Guest Post: Fictional SEC Official Discusses Crypto Off-the-Record  

John Reed Stark

In the following guest post, John Reed Stark takes a closer look at President Donald Trump’s recent Twitter tirade against cryptocurrency and lays out a roadmap for the President to follow if his administration were to crack down on cryptocurrency. John is President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. A version of this article previously appeared on Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
Continue Reading Guest Post: A Roadmap for President Trump’s Crypto-Crackdown

John Reed Stark

In a February 14, 2019 order, Southern District of California Judge Gonzalo Curiel entered an order reversing his earlier decision on the same issue and concluding that the digital tokens offered by cryptocurrency company Blockvest LLC represented “securities” within the meaning of the federal securities laws. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at Judge Curiel’s ruling and what it many mean for future securities litigation involving digital currency offerings. A version of this article previously was published on Securities Docket. I would like to thank John for allowing me to publish his article as a guest post. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
Continue Reading Guest Post: Judge Reverses Blockvest Decision: ICOs are Securities