In a recent court case, an investor group filed a lawsuit against Binance, the company that operates the Binance exchange. The group alleged that their funds were lost due to an unannounced outage. The investors claim that the outage was unforeseeable and caused them millions of dollars in losses. Unlike other companies, Binance is not a publicly listed company and must handle legal proceedings through the Hong Kong International Arbitration Centre (HKIAC). The investors’ claim is based on consumer protection.
Several crypto exchanges have faced lawsuits recently.
Some, such as Coinbase, have been accused of sloppy security systems. As a result, customers are vulnerable to theft and unauthorized transfers of funds. This has led to a putative class action lawsuit filed in the U.S. District Court for the Northern District of Georgia. This lawsuit alleges that Coinbase failed to secure its customers’ accounts and caused them to suffer losses. George Kattula opened an account with Coinbase in January 2014 and purchased over $6,000 worth of cryptocurrency. Three months later, his account was emptied of his money. Coinbase recovered only $1,000 of the funds.
Check our article to know how Suing to recover stolen crypto. Nevertheless, it is a viable option. The Lyon Firm focuses on protecting the consumer’s rights and the rights of its customers. The firm also represents clients who have suffered losses due to the negligent actions of Crypto Exchanges. There are also ongoing data privacy class actions that are seeking compensation for those who have been victims of cryptocurrency theft.
One recent lawsuit against the world’s largest crypto exchange, Binance, has been dismissed by a federal court in New York. This lawsuit was one of a series of similar actions filed against cryptocurrency exchanges in 2020. The investors who filed the lawsuit claimed that Binance had falsely advertised its currency, Terra USD, as a safe investment. The cryptocurrency exchange failed to register as a securities exchange in the U.S.
Why addition to the regulatory and legal challenges
lawsuits against crypto exchanges can involve investors, regular users and regulators. Recently, a group of celebrities has become involved in private legal actions. In January, Kim Kardashian and Floyd Mayweather Jr. were the targets of a putative class action alleging false statements on social media. Another lawsuit has been filed in the federal court in Manhattan against Mason Rothschild, alleging trademark infringement.
Another recent lawsuit against Coinberry was filed in Ontario, Canada, and was filed after it accidentally allowed users to buy bitcoins using Canadian dollars. The affected registered users were given the option of initiating an e-transfer to recover the bitcoins. However, the plaintiffs have yet to recover two-thirds of their BTC.
While it’s possible to sue a cryptocurrency exchange in a court of law, determining liability is not an easy process. For one thing, cryptocurrency exchanges generally keep holdings in a default wallet. That makes them vulnerable to cyberattacks. Cybercriminals regularly breach the security systems of crypto exchanges and bypass two-factor authentication. Furthermore, many blockchain and crypto technologies are experimental and have inherent vulnerabilities. In such cases, funds are often compromised.
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