The cryptocurrency market has become big business in recent years.
With more investors than ever before leaning into the potential of crypto, the IRS has even deigned to alter the cryptocurrency investment question for all taxpayers on its personal tax return form.
Despite the popularity of the cryptocurrency market, however, well-known cryptocurrencies like Ethereum, BNB, XRP, and Cardano posted notable losses last weekend.
Bitcoin, the most popular cryptocurrency in the world, hit a three-year low. CNBC shared thoughts from Sadie Raney, co-founder and head of operations at Strix Leviathan:
“Regulatory pressure, rising base rates, and inflation are pressing heavily on riskier asset classes, especially crypto, and are thus forcing liquidations, reducing capital available for investment, and increasing concerns over undefined regulatory controls. These forces may mute the overall crypto complex until the financial system stabilizes and a regulatory framework becomes more clear.”
As the cryptocurrency market seemingly slides, lawyers are preparing for a potential deluge of class action lawsuits. A report from Stanford Law School, in conjunction with Cornerstone Research, indicates that lawyers have filed 58 securities class actions against crypto companies since 2016.
And, it seems that this number may grow in the coming months and years.
Finance giant, Bloomberg, also recently weighed in on the situation, noting specifically that the complaints “targeting entities including Coinbase and Binance, two of the world's largest crypto exchanges — allege that the trading platforms, coin issuers and other firms are shirking disclosure requirements mandated by federal securities laws and that they should be on the hook for investors' losses.”
John Jasnoch, who is a partner at the law firm Scott & Scott, spoke to the outlet, saying, “There was a crash and a lot of the excesses and abuses started to come to light.”
Scott & Scott is currently overseeing seven crypto class action cases.
At this time, Bloomberg shared, it remains to be seen if ongoing cryptocurrency claims will “break any broad-ranging legal ground.”
However, as litigation continues in current cases, cryptocurrency's use continues to expand. The State of Colorado, for instance, recently approved the use of crypto to pay state taxes.
What do you think about class action lawsuits in the cryptocurrency space?
About Martinez & Shanken, PLLC
Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services. Partners Deborah Martinez and Earl Shanken work to ensure your business accounting is done with integrity and to your satisfaction.
