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Crypto exchanges legal claims overview:
- Who: Legal claims involving cryptocurrency exchanges and individuals in the crypto space have recently been in the news.
- Why: The crypto-related challenges include hacking, fraud, security flaws and an alleged failure to secure customer accounts, among other things.
- Where: The crypto exchanges legal claims are nationwide.
Legal challenges involving cryptocurrency exchanges and/or individuals connected to the space have made headlines recently, including claims revolving around hacking, fraud and security flaws, among other things.
Cryptocurrency differs from traditional physical currency in that it is digital only, not backed by a government or bank and unregulated.
Celsius founder charged with fraud following bankruptcy of crypto exchange
The founder of the now-bankrupt cryptocurrency exchange Celsius Network LLC was charged with fraud earlier this month over claims he misled customers about the actual value of the company’s proprietary crypto token, CEL.
Alexander Mashinsky, who founded Celsius in 2017, was charged in a Manhattan federal court with securities fraud, commodities fraud and wire fraud over claims he misled customers about core aspects of the company.
Mashinsky has also been accused of artificially inflating the value of CEL in addition to allegedly falsely portraying the Celsius exchange as a safe and secure institution.
Former Amazon security engineer charged with hacking unnamed cryptocurrency exchange
A former security engineer for Amazon was arrested earlier this month and charged with wire fraud and money laundering over claims he defrauded investors on an unnamed crypto exchange out of $9 million in cryptocurrency.
Shakeeb Ahmed has been accused of hacking the unnamed cryptocurrency exchange in July 2022 prior to laundering funds he allegedly stole through “a series of complex transfers on the blockchain.”
Ahmed is alleged to have used his skills as a senior security engineer to exploit a vulnerability in one of the cryptocurrency exchange’s smart contracts, ultimately leading to it generating around $9 million worth of inflated fees.
Coinbase allowed to arbitrate claims it failed to secure customer accounts, judge says
A federal judge in Georgia ruled earlier this month that cryptocurrency exchange Coinbase will be allowed to arbitrate class action claims that it failed to adequately secure the accounts of its customers.
Coinbase filed a motion to compel arbitration for the claims, which a customer filed, arguing the platform allowed unknown parties to transfer nearly $6,000 worth of cryptocurrency from their account.
The customer, who also claims $1,000 was fraudulently withdrawn from his account, accuses Coinbase of rejecting his subsequent complaint and refusing to reimburse him for the allegedly unauthorized transactions.
Atomic Wallet accused of knowing about security vulnerabilities prior to June data breach
A class action lawsuit was filed against Atomic Wallet and Konstantin Gladych, its founder and CEO, last month over claims the company knew of existing security vulnerabilities in its platform prior to a June data breach.
A pair of consumers behind the class action lawsuit claim the data breach resulted in the loss of more than $100 million in crypto assets despite Atomic Wallet allegedly being aware of security vulnerabilities since as early as last year.
“Defendants were informed that funds held in Atomic Wallet may be at risk due to these security vulnerabilities but took no measures to inform users of those risks or protect against those risks,” the Atomic Wallet class action states.
SEC, Binance agreement allows cryptocurrency exchange to stay open amid enforcement lawsuit
The U.S. Securities and Exchange Commission (SEC) came to an agreement with Binance in June that will allow the crypto exchange to continue operating amid an ongoing enforcement lawsuit.
The agreement also allows the SEC to oversee the spending practices of Binance’s American version of its cryptocurrency exchange, Binance.US.
The SEC, which called the agreement “emergency relief,” says the deal will protect crypto assets belonging to Binance’s American customers, while the exchange said it will enable it to continue operating without interruption.
Nascar asks Florida judge to dismiss complaints revolving around failed LGBCoin
In May, Nascar asked a federal judge in Florida to permanently dismiss a pair of class action lawsuits accusing the motorsports organization of breaking a sponsorship deal for a so-called crypto memecoin called LGBCoin.
Investors argue they suffered financial losses after the trading price for the LGBCoin dropped to zero after Nascar chose to rescind a sponsorship deal between the trustee for the digital asset and Nascar driver Brandon Lee Brown.
The complaint was previously dismissed by the same Florida federal judge, however investors filed another lawsuit against Nascar only a week later.
Have you been impacted by recent legal challenges revolving around cryptocurrency? Let us know in the comments.
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4 thoughts onCrypto exchanges face legal claims over fraud, security
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I had over $7000 transferred out of Coinbase into a dummy exchange I think? Forexallied. Com
I had massive amounts of Cryptocurrency stolen from Blockchain and Coinbase. Coinbase also stole monies from my BOA account and recently sent me a email showing me that they allowed someone to steal from my account that they had locked me out of. Funds are still in my account and I cannot get to them. Block Chain has stolen from me for over 10 years giving my BTC to other multiple wallet addresses and I have questions multiple times and they ignore me.
Every person dealing with crypto and having any amount of crypto should know that the only safe place to keep your coins is in a offline wallet, any where else can be stolen, happens all day long