The issues trailing the ICO crowdfunding characteristics of the cryptocurrency world, seem to be coming on a rise, statistics have shown. According to Cornerstone Research – an economic and financial consulting firm, more than 6% of the total securities action lawsuits that have been recorded in the current year, are instances that actively links to disagreements between parties involved in the digital currency circle, and most especially the initial coin offers.
What the numbers look like: Analysts say the figures are rising
Figure analysis has been carried out in a bid to determine the current trend, as well as a means of showing the tendencies that loom in the future. According to Cornerstone’s security class action filings report for the first half of the year 2018, seven lawsuits representing 6% of a total 111 security class legal action have been tied to ICO controversies. It is, in fact, pertinent to note that these filings are entirely ICO related, and are not in any way, attachments to other bothering issues.
All of these shows an increase of 0.25% as against the records obtained in 2017, where 5 of the total 87 security’s action lawsuit were ICO related.
Furthermore and according to the economic and financial company, a whopping 750 financial securities class actions have been recorded since midyear 2016. This shows a smashing figure as against that which was obtained from the most prolific 24 months period after the enactment of the Private Securities Litigation Reform Act (PSLRA) of 1995.
An estimated 8.5% of companies on the NYSE and NASDAQ would face litigation by 2019
Following the events surrounding the lawsuits that have gone through the litigation processes, some cryptocurrency outfits have already settled some scores before the courts, while some others still have axes to grind.
Notable amongst the filed security class actions are those involving the Lithium network, Cloud With Me, Paragon Coin, DRIP, and Mining Max. On another hand, such network as Bitconnect is facing suits on accusations based on “failure to disclose material facts” necessitating its closure, and those of the Ripple lab.
Cryptocurrency giants Ripple, are also under judicial investigation for alleged unlicensed sales of the Ripple token, amounting to several millions of dollars. The plaintiff argues that the XRP tokens were created to “have all the traditional hallmarks of a security” and hence, shouldn’t be pushed out in such manner to retail investors.
According to Joseph Grundfest, a coauthor of the Cornerstone report, and a former commissioner of the United States security and exchange commission:
“Class action securities fraud litigation continues to affect a large percentage of publicly traded firms. If the trends observed in the first half of the year continue till year-end, approximately 8.5 per cent of all companies listed on the NYSE and NASDAQ markets will have been sued in these cases.”
Now, these occurrences are important ones to consider, as they could affect a majority of cryptocurrency investors, just one way or the other.
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