As a seasoned crypto investor with over a decade of experience navigating the digital frontier, I can’t help but feel a mix of emotions reading this latest development involving Bancor and the US federal court decision. On one hand, it’s reassuring to know that jurisdictional issues are being taken into account, as it underscores the growing recognition of crypto as a global phenomenon.
A U.S. federal court has thrown out a legal claim brought by investors against Bancor, a platform for trading cryptocurrencies without intermediaries, concerning the discontinuation of an investment safeguard. The court decision states that Bancor, its creators, and affiliated parties are not subject to U.S. lawsuits due to complications regarding jurisdiction.
On September 9, Judge Robert Pitman of the US District Court for the Western District of Texas agreed with a lower court’s suggestion to dismiss a class action lawsuit. The lower court judge found that Bancor, a company based in Israel and Switzerland, does not have enough connections to the U.S. for the court to claim jurisdiction over it personally.
Furthermore, it was determined in this instance that U.S. securities regulations do not extend to Bancor, given the issue of jurisdiction, which refers to the fact that American laws are not enforceable outside of the United States’ territories.
Investor Concerns over Feature Suspension
The lawsuit was filed by a group of US cryptocurrency investors who claimed that Bancor had suspended a key investment protection feature, which they argued exposed them to financial risk.
Back in late 2020, Bancor introduced a mechanism to guard liquidity providers against market fluctuations, called impermanent loss protection. This feature compensated users for their losses by giving them Bancor’s native token, BNT, which they could sell to cover their losses. Unfortunately, Bancor halted this program in June 2022, attributing the decision to unfavorable market circumstances.
Consequently, those supplying liquidity endured irreversible losses since the program’s termination, leading them to take legal action against Bancor, claiming they were not adequately warned before the removal of the risk protection element.
As a crypto investor, I’ve learned from recent developments that Judge Pitman has determined in our case that the provided evidence was insufficient to prove that the cryptocurrency transactions were within the United States or under its jurisdiction. The advice given to us, the plaintiffs, is to refile our claims in Israel or Switzerland, the home countries of Bancor and its founders, where they have their primary operations.
Broader Implications for Crypto Litigation
The case highlights one of the many lawsuits filed by investors against service providers for financial losses in the volatile cryptocurrency market. Earlier this year, Canadian investors sued Binance, the world’s largest crypto exchange, for offering derivatives products in the region without proper regulatory authorization.
The plaintiffs in that case seek compensation for being misled into buying unregistered securities.
Binance is facing comparable regulatory issues in the U.S., where investors have filed lawsuits against the exchange for selling unregistered tokens, including aelf (ELF), EOS, FUNToken, Icon, OMG Network, Quantstamp [NC], and Tron. These digital assets have experienced varying levels of volatility and market caps, with aelf ELF having a 24-hour volatility of 1.2%, a market cap of $265.90 million, and a volume of $22.80 million; EOS with a 24-hour volatility of 2.1%, a market cap of $743.92 million, and a volume of $91.69 million; FUNToken with a 24-hour volatility of 2.7%, a market cap of $35.42 million, and a volume of $985.78 thousand; Icon with a 24-hour volatility of 3.0%, a market cap of $129.15 million, and a volume of $3.38 million; OMG Network with a 24-hour volatility of 1.6%, a market cap of $31.46 million, and a volume of $4.61 million; Quantstamp [NC] not provided, and Tron with a 24-hour volatility of -0.7%, a market cap of $13.26 billion, and a volume of $411.60 million.
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2024-09-10 13:54