Blockchain-litigations, public and private, “(took) off…exponentially” in 2018, and Virginia-based Law firm Murphy & McGonigle is using its Blockchain Litigation Database (“BLD”) to track the 250 court actions that have ensued following the crypto market bust of late 2017. In the last 60 days, 7 new cases have been filed according to the DB.
M&M says it is, “us(ing) that mined intelligence to factor into client counsel,” and according to Forbes, rival firms can also access the database- for a $5000 USD initial access fee and $2500 a month thereafter.
Well worth it some might feel. Blockchain lawyering, says Forbes, is a growth area, with, “…the average revenue per lawyer…$906,000…”
Vice president of ALM legal intelligence, Patrick Fuller, also told the outlet that lawyers in the sector can charge a premium that can exceed $1.5 million per year. “That means lawyers who practice blockchain in the 200 largest law firms in the U.S. may bring in between $628 million and $1.04 billion annually,” Forbes concludes.
All told, the conclusion in M&M’s “2018 in Review: Blockchain Litigation” reiterated that 2018 was the year crypto markets got sober as regulators began coordinated step-ins and hot money flowing out of coins caused a market collapse of more than 80%.
The data set collates information on, “cryptocurrencies, blockchain-based companies, mining companies, crypto-investment platforms, exchanges, ICO issuers, and consultants.”
According to Forbes, subscribers can also peruse the site for info on, “annual trends, whether a case is criminal or civil, whether the case involves oversight by the SEC or the CFTC, and the ability to search for terms that might relate to other pending or potential cases.”
A notable regulatory event was that the SEC summarily countered crypto industry claims that the Howey Test was archaic and unclear by releasing cease & desist orders against Airfox and Paragon and, according to M&M, “…stat(ing) that the orders provide a Path to Compliance for other issuers of unregistered tokens.”
M&M adds that, “The SEC also warned that (the Airfox and Paragon orders) put market participants on notice,” and said the regulator indicated that it planned to move forward with, “non-fraud violations.”
State regulators were very active in 2018, bringing 46 “administrative cases.”
Active jurisdictions, from most to least, included:
1. Texas 2. Colorado 3. Alabama 4. North Dakota 5. New Jersey 6. North Carolina 7. Massachusetts 8. South Carolina 9. Indiana 10. Maryland 11. Missouri 12. Ohio 13. Vermont
Several US courtrooms have been considering jurisdiction. Many cryptocurrency/ digital token issuers are US citizens or residents who register their companies abroad. Many investors are also domiciled in the US, where securities-issuance and money-transmission rules can vary state-to-state.
A court in California, considered “Tezos Securities Litigation, No. 17-cv-06779-RS (N.D. Ca. Aug. 7, 2018),” which was a “Federal securities lawsuit against foreign defendants for ICO.”
All told, “The district court denied the dismissal motions, holding that the plaintiff’s averments ‘support[ed] an inference that [the] alleged securities purchases occurred in the United States.’”
Conversely, in New York, “ICO Servs., Ltd. v. Coinme, Inc., No. 18-cv-4276, 2018 WL 6605854 (S.D.N.Y. Dec. 17, 2018), “a breach of contract lawsuit brought against a non-New York company by an overseas consultant retained to assist with the company’s ICO,” the court determined that, “New York’s long-arm statute did not permit personal jurisdiction over the company not based in New York.”
Although the SEC continues to rely on the Howey Test for determining whether or not many tokens are securities, according to M&M, in certain ongoing cases, individual courts tasked with determining whether tokens are securities or commodities have come to the interim conclusion: “maybe.”