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Top 10 Legal Cases Against Cryptocurrencies and Crypto Exchanges

Over the past few years, cryptocurrency has caused enormous hype in the financial market. Currently, the adoption of digital assets is high and experts believe that in the future, cryptocurrency might replace local or fiat currency. The repercussions have taken a back seat in comparison to the swift transaction facilities offered by these digital assets. But crypto investments go awry, leading to long-term court cases. Here is a list of the top legal cases against cryptocurrencies and crypto exchanges that caught the attention of crypto enthusiasts worldwide.

• New York Office of the Attorney General vs. Bitfinex: The New York OAG was investigating Bitfinex over allegations of fraud and misleading investors. Prosecutors alleged the crypto exchange and its associating stablecoin firm, Tether, for covering up a loss of US$850 million, and in doing so misled the investors. The New York County Supreme Court Judge decided not to terminate the investigation on the companies, and in response, the companies said they will appeal the decision.

• SEC vs. Trendon Shavers: The operator of the Bitcoin Savings and Trust (BTCST), Shaver’s, came under the legal scrutiny of the SEC for soliciting illicit investments in bitcoin-related opportunities from several lenders. This case provided insight to the judge into how bitcoin-denominated damages can be accessed in the future, with only using the daily price of bitcoin at the time the scheme was uncovered.

• The State of Florida vs. Espinoza: In August 2021, the Bitcoin Foundation filed an amicus curiae based on the case filed on Florida resident Pascal Reid, seeking to dismiss a money transmission charge. Reid and Mitchell Anber Espinoza were arrested in the sting operations where they carried out fake transactions with undercover agents and converted US$30,000 into bitcoin. Both of them were filed against money laundering charges but dismissed because bitcoin is not real money.

• Oracle vs. CryptoOracle: Software giant Oracle filed a lawsuit against the blockchain startup CryptoOracle, with allegations of trademark infringement and cybersquatting, followed by the publicity of the startup on CNBC. According to the complaint, the startup used Oracle’s name to boost its reputation. The tech giant first attempted to solve the issue outside courts, but it resulted in the startup filing for CryptoOracle’s trademark.



• South Korea’s crypto exchange Bithumb sued for fraud: South Korea’s crypto exchange subsidiary Bithumb was sued for criminal charges of fraud and also faced allegations of breach of contract in Hong Kong. The accusations were that the exchange acted in bad faith when it announced its plans to open an exchange in Thailand and used this announcement to make people invest in its BXA coin. Bithumb lost the lawsuit and was charged to pay US$100 billion in compensation.

• Harrison Hines vs. Joseph Lubin: Founder of ConsenSys-incubated startup Token Foundry, Harrison Hines alleged that his former business partner Joseph Lubin breached the contract and issued him US$13 million. The case was filed at the New York Supreme Court and mentioned that Lubin had a connection with the breach of contract, quantum meruit, fraud, unpaid profits, and more.

• The US vs. Ross William Ulbricht: In this case, Ulbricht was accused of running the defunct online black market Silk Road. In February 2014, he was indicted with charges of computer hacking, drug trafficking, money laundering, and other illicit activities. He allegedly used bitcoin for all his transactions. On grounds that bitcoin is not real money, he was pleaded not guilty.

• The Supreme Court of India vs. The Reserve Bank of India: The Supreme Court had openly criticized RBI’s handling of the cryptocurrency ban in July 2018. In its session, the court had ordered the RBI to respond within two weeks. The case ran throughout a rough period while the Indian government considered a blanket law that made cryptocurrencies illegal for Indians to use.

• Santander Bank vs. Mercado Bitcoin: Santander was sued by Mercado Bitcoin in 2018 as a result of the exchange’s account being locked and closed. The Spanish bank primarily appealed to the court’s decision but later denied it and agreed to follow the court’s decision to pay the fine.

• The US Federal Trade Commission vs. Bitcoin Funding Team: In March 2018, the US FTC placed a freeze on Bitcoin Funding Team’s accounts through a court order alleging the process to practice misleading marketing practices. In 2019, the FTC announced that it settled the charges, which added up to under approximately US$1 million.

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