Published September 21, 2018
On September 11, 2018, legal analytics firm Lex Machina released its 2018 Securities Litigation Report presenting findings from analyses of its database including over 15,000 federal securities cases. The report concluded that 45 federal securities lawsuits involving cryptocurrencies, blockchain technologies and/or Initial Coin Offerings (“ICO”) were filed in the first six months of 2018—triple the number of such cases filed in 2017. In discussing these findings with The National Law Journal, Laura Hopkins—a legal data expert with Lex Machina—noted that the U.S. Securities and Exchange Commission (“SEC”) was the second most active filer of cryptocurrency-related securities cases, “topped only by the law firm Levi & Korsinsky,” representing investors in more than 30% of these cases.Levi & Korsinsky is at the forefront of cryptocurrency-related litigation. For instance, the firm has been litigating on behalf of investors in Centra Tech, Inc.’s ICO (“Centra ICO”) since December 13, 2017, Rensel v. Centra Tech, Inc., 17-cv-24500-JLK (S.D. Fla. filed Dec. 13, 2017) (the “Centra Action”). Notably, the Centra Action was initiated nearly four months prior to the Government’s filing of civil and criminal actions predicated on substantively identical factual allegations and similar legal theories. The firm’s efficient representation of cryptocurrency investors has yielded substantial benefits for such investors. For example, within just six days of the firm initiating an action on behalf of investors in Paragon Coin, Inc.'s ICO (the “Paragon ICO”), Holland, et al, v. Paragon Coin, Inc., et al, 4:18-cv-00671-JSW (N.D. Cal. filed Jan. 30, 2018), the firm negotiated and secured an on-the-record agreement with defendants pursuant to which defendants agreed to, inter alia, limit their use of cryptocurrencies raised in the Paragon ICO to specific enumerated uses; limit access to these funds to two individual defendants; and ensure any such funds converted to fiat currency would remain under Paragon’s control at a U.S. financial institution. Similarly, the firm’s vigorous litigation of plaintiff’s renewed motion for a temporary restraining order in the Centra Action resulted in Magistrate Andrea M. Simonton’s June 25, 2018 Report and Recommendation (the “Centra R&R”), which has prevented the dissipation of millions of dollars’ worth of Ethereum invested in Centra ICO. Levi & Korsinsky is leading the charge in this new area and, as a result, the firm has been appointed Lead Counsel or Co-Lead Counsel to serve on behalf of investors in cryptocurrency-related class actions by six different United States District Court Judges. Moreover, the firm’s prosecution of these cases is assisting courts in defining legal standards in an emerging field of securities litigation. For instance, Law360’s Expert Analysis of the Centra R&R, “The 1st Judicial Finding That Judicial Tokens are Securities,” published on July 31, 2018, concluded that the Centra Action is one of two cryptocurrency-related securities cases that are “helping to shape a body of law that courts will look to when faced with deciding” whether “tokens sold in the absence of fraud are securities.” The National Law Journal’s article regarding the Lex Machina 2018 Securities Litigation Report is available here. You may also read Law360’s Expert Analysis of the Centra R&R is available here.