When crypto projects issue their newly minted digital coins for the first time, it’s commonly referred to as an Initial Coin Offering, or ICO. During an ICO, millions, or even billions of dollars of digital currency are often sold to excited coin holders. While an ICO is an exciting time, it can also attract some unwanted attention.
Case in point: there were a dozen class-action lawsuits filed on one Friday this past spring against a dozen different top crypto companies by a single New York-based law firm. The suits accused the crypto companies of issuing their digital coins as unregistered securities to investors. In past years, these cases could have been litigated for a long time. Though, more recently they often don’t materialize the way accusers imagine.
One of the main reasons the tide has begun to slowly turn in favor of crypto companies is based on statements issued by SEC Chairman Jay Clayton clarifying that cryptocurrencies are replacements for sovereign currencies and are not considered securities. Yet, there are always opportunists who try to take advantage and capitalize wherever they can.
These legal actions against many crypto companies are not based on any wrongdoing in how the digital currencies are offered. It would be like an investor suing Apple because they bought its stock and then became upset when the stock temporarily dipped in value. Since the financial instrument/security status of cryptocurrency has been questioned in the past, it opens the door for these potential cases, which tend to also defame their good names in the process.
We live in a democracy with solid protections under the law, which allow for these types of cases to be brought so easily. Thankfully, the merits of these cases usually don’t hold up in court and they end long before they are fully litigated. If they were strong cases, then theoretically any time there was a drop in coin value, a case could be brought and won and would close the coin project, leaving no cryptocurrencies in existence.
The biggest challenge that exists is when these cases are brought against startup crypto projects that lack the funding to fight back legally. The cost of defending themselves against false accusations can be overwhelming for new crypto companies.
The overwhelming majority of coin buyers are sincere, understand that values fluctuate based on market conditions and are not willing to risk losing their own money on baseless lawsuits. This is why the cryptocurrency community continues to grow and flourish. META 1 Coin Trust is grateful to our coin holders for your enduring support. We have successfully warded off false legal claims and actions in the past and we remain committed to bringing the legal fight to clear our good name and to fulfill our mission of advancing abundance and freedom for Humanity.