Increased regulatory oversight and recent turmoil in the digital asset market have led to a rising number of securities litigations focusing on cryptocurrencies. Sixteen cryptocurrency-related class actions have been filed this year — more than in any single year since the first such filing was recorded in 2016, according to Stanford Law School’s Securities Class Action Clearinghouse.
Suits against cryptocurrency exchanges in particular are up significantly, according to Cornerstone Research, accounting for almost half of all cryptocurrency-related class action filings since the start of 2020. This stands in contrast to filing activity between 2016-19, when less than 10% included exchange-related allegations.
Despite recent turmoil in the cryptocurrency market, it is unclear whether the pace of filings will continue. It may slow due to lack of investor interest, but on the other hand, securities litigation is often driven by decreases in the underlying asset’s value. (Consider, for example, the number of mortgage-backed securities cases in the wake of the 2007-09 global financial crisis.) If the cryptocurrency sector remains turbulent, and if enforcement ramps up as expected, 2023 could be another record-breaking year.
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