11 lawsuits filed against tokens and cryptocurrency exchanges in New York

11 lawsuits have been filed in the court of the Southern District of New York against cryptocurrency firms, including Binance, Tron Foundation, and KuCoin, forallegations of violation of securities laws.

Eleven new class action lawsuits filed on April 3in the Federal District Court for the Southern District of New York by the law firm Roche Freedman. In separate complaints, defendants include Binance, Civic, BProtocol, Status, Block.one, KayDex, Quantstamp, BiBox, TRON Foundation, KuCoin, HDR Global Trading, as well as the CEOs of certain firms, including Brendan Blumer, Dan Larimer, Vinny Lingham and Changpeng Zhao.

The plaintiffs are Chase Williams,Alexander Clifford (Alexander Clifford) and Eric Lee (Eric Lee). The complaint alleges that firms violated U.S. federal securities laws by issuing tokens and / or illegally selling them to U.S. residents. Complaints against company executives fall under the responsibility of the “controlling entity” and its obligation to enforce securities laws.

Lawsuits have been filed against 11 companies, the majoritywho are located outside the United States. If we summarize the content of the lawsuits, then their key component is accusations of the unregistered release of token shares and/or their sale to American investors. Additionally, exchanges may be liable for selling securities as unlicensed broker-dealers if the tokens in question are ultimately determined to be securities.

So, for example, in a lawsuit against the KuCoin exchangeIt is said that the complaint was filed on behalf of investors who purchased ten digital tokens on the site. KuCoin has been selling them since September 2017 without registering as a broker-dealer or exchange license. The list of sold tokens mentioned EOS, SNT, QSP, KNC, TRX, LEND, ELF, CVC and TOMO.

If the court determines that any of theseThe token is a security and was sold to KuCoin, which did not have the relevant permissions, the exchange may suffer losses, as well as become the subject of inspections by regulators. Similar charges were brought against Binance that all the listing agreements that the exchange entered into with token issuers were implemented in violation of the Exchange Act, and also without registering as a broker-dealer.

The lawsuit against Tron Foundation is disputedthe similarity of TRX with BTC, and it is alleged that the token was issued and controlled by the defendants in a completely centralized manner, and also constitutes a security:

"… creating TRX tokens thusoccurred through a centralized process, unlike Bitcoin and Ethereum. This, however, was not obvious when selling tokens to investors. Thus, buyers were misled into believing that TRX was not a security.”

Let us recall that recently the courtNew York has banned the distribution of Gram tokens to non-US residents. The court rejected Telegram's request, in which the company asked to clarify whether the ban applies to the distribution of Gram tokens to investors from other countries that are not subject to US securities laws.

</p></p>