The overall performance of the cryptocurrency asset markets in 2024 has led to a notable reduction in the number of securities class action lawsuits related to crypto, marking a significant decline compared to previous years. Although there has been a drop in the volume of cases, the nature of the allegations presented by plaintiffs remains largely unchanged. This report delves into the trends observed in crypto securities class action litigation for 2024, highlighting the decrease in filings, the geographical distribution of cases, the current litigation stages, the types of defendants involved, the nature of allegations, and the impact of various disclosures on stock or asset prices.
### Significant Reduction in Filings Linked to Market Strength
In 2024, only eight crypto-related securities class action lawsuits were filed, reflecting a dramatic decrease from the previous years—14 cases in 2023, 23 in 2022, 12 in 2021, and 13 in 2020. This significant decline is likely attributable to the substantial recovery and robustness of the crypto asset markets during 2024. Historical patterns suggest that fewer lawsuits are typically initiated during periods of rising crypto prices, as investors tend to profit. Conversely, the number of lawsuits tends to increase when the market experiences downturns, often referred to as “crypto winter,” characterized by declining asset prices.
### Jurisdiction and Current Litigation Stages
The limited number of crypto securities class action cases filed in 2024 indicates a less widespread geographical presence compared to previous years. Cases for this year have predominantly emerged from New York, California, New Jersey, and Pennsylvania. Specifically, there are two filings from the Southern District of New York and two from the Eastern District of New York, alongside additional cases from California, New Jersey, and Pennsylvania. New York and California appear to be the preferred jurisdictions for these cases, likely reflecting the strong presence of crypto businesses and favorable outcomes in past cases within these states. Notably, the majority of defendants in 2024’s actions were based in the U.S., consistent with trends observed in prior years. Among the defendants, significant entities include Future FinTech Group Inc., Hut 8 Corp., Dolce & Gabbana USA Inc., and celebrity Caitlyn Jenner, who is also a defendant in one case.
### Nature of Allegations and Types of Defendants
The crypto securities class actions registered in 2024 feature a diverse array of defendants, such as crypto miners, financial services firms involved in crypto activities, trading platforms, and NFT issuers. A noteworthy observation is that three of the eight cases involve defendants associated with crypto platforms, while two pertain to NFT-related firms. This trend aligns with patterns from previous years, where crypto exchanges and NFT companies have frequently been targeted in class action lawsuits. Common allegations include violations of anti-fraud provisions under the Securities Exchange Act and claims regarding the unregistered sale of securities, particularly in the context of meme coins and NFTs.
### Case Spotlight: Hut 8 Corp., Iris Energy Limited, and Future FinTech Group
One of the highlighted cases is against Hut 8 Corp., a crypto asset and data mining firm formed through a merger in late 2023. The plaintiff alleges that the defendants made materially false statements regarding the financial health of a subsidiary, USBTC, which was reportedly on the verge of bankruptcy. Another case involves Iris Energy Limited, where claims were made that the company exaggerated its operational prospects. The case against Future FinTech Group Inc. centers around allegations of stock price manipulation by its CEO, who is accused of making misleading statements regarding the company’s stock and its regulatory risks.
### Coinbase Global, Inc. and NFT-Related Securities Litigation
Coinbase Global, Inc. is also embroiled in litigation as the only crypto asset exchange implicated in a class action. Allegations include making false statements about its British unit’s compliance with regulatory requirements. The stock reportedly declined significantly following announcements related to regulatory penalties. Additionally, two NFT-related class actions were filed against Dolce & Gabbana USA Inc. and Midnight Hub, both of which involve claims of unregistered securities offerings linked to their NFT projects.
### High-Profile Meme Coin Cases and Future Implications
Lastly, two notable cases involve meme coins associated with celebrities, highlighting the intersection of celebrity endorsements and the crypto market’s volatility. These cases bring attention to the risks posed to investors, particularly those who may lack the experience to navigate the speculative nature of meme coins. The end of a bull market in 2025 may result in a resurgence of class actions against entities associated with meme coins that experience significant value declines, further shaping the landscape of crypto litigation in the years to come.
