Cryptocurrency exploded in popularity in 2017, due in large part to its freedom from government oversight and intervention. Investor advocates have warned for quite some time that government oversight was not only coming but was necessary to protect investors from fraudulent and unfair practices in the crypto world. The first of many steps along that path has already been taken in Texas, and additional steps -- as well as the need for such regulatory oversight -- appear to be imminent as well.
Earlier this week, BitConnect -- a self-proclaimed all-in-one bitcoin and crypto platform -- was told to cease and desist soliciting customers in Texas. The Texas Securities Commissioner announced that BitConnect investments are “securities” that were not registered with the necessary regulatory agencies, which makes them illegal to be offered for purchase. Consistent with the claims asserted in several lawsuits filed by Silver Miller -- the leading crypto investor law firm in the United States -- cryptocurrency companies are strictly liable for offering and selling unregistered securities.
In response to those who question why government regulation would be wanted or is necessary in the crypto world, investor advocates point to the growing problems and unresolved customer complaints at the HitBTC crypto exchange -- one of the ten largest exchanges in the world -- as a prime example of what can go wrong when a cryptocurrency exchange is allowed to take investors’ money without any accountability. Over the past several months, HitBTC customers have faced withdrawal delays lasting weeks at a time, which caused those investors hundreds of thousands of dollars in losses. Additionally, some HitBTC customers have accused the exchange of fraud and of stealing nearly $15 million worth of customers’ Ripple. As customer frustrations and problems have mounted, HitBTC’s operations have remained opaque; and the company has provided little, if any, response or resolution to its aggrieved accountholders.
Silver Miller currently represents the victims in class/group action lawsuits against multiple cryptocurrency exchanges (Cryptsy; Coinbase; Kraken) for platform-related failures and is prosecuting class action suits across the country against start-up companies Tezos, Monkey Capital, and Giga Watt for having sold newly-created, pre-functional tokens in unregistered Initial Coin Offerings (ICOs) that violated federal and state securities laws. Just as with BitConnect, an unregistered security cannot be sold in the United States without government permission; because doing so without permission has been deemed harmful to investors. If you have invested in an ICO, are concerned that your holdings at a cryptocurrency exchange are in jeopardy, or fear that you have been defrauded, contact Silver Miller for a no-cost, no-obligation consultation to discuss your legal rights.