Court Dismisses Securities Fraud Case Against Bancor: A Legal Twist in the Crypto World

Judge Hellerstein Brings Down the Gavel

A federal district court in New York has hit the brakes on a securities fraud class action targeting the Israel-based cryptocurrency firm, Bancor. U.S. District Judge Alvin Hellerstein made a decisive ruling on Monday to toss out the case, citing a potent mix of jurisdictional issues and the plaintiffs’ failure to demonstrate actual losses. Not exactly a win for the plaintiffs, but hey, that’s the legal arena for you!

The Case at a Glance

The case was instigated by New York law firms Roche Cyrulnik Freedman and Selendy & Gay in April 2020. They alleged that the Bancor protocol developer, BProtocol Foundation, had violated both federal and state securities laws by peddling unregistered securities within U.S. borders. Sounds juicy, right? Well, not according to Judge Hellerstein.

The Jurisdiction Predicament

In a detailed filing, the court determined that simply promoting the BNT token did not stretch enough legal muscles to justify jurisdiction over the BProtocol Foundation. The crux of the judgement was the phrase “forum non conveniens,” which essentially says, “nope, not here.” This dismissal has the potential to send ripples through the crypto legal landscape.

Why the Judge Said Nope

• The BProtocol Foundation operates under Swiss law.
• Its offices are located in Zug and Israel, not exactly next door in New York.
• The plaintiff, Timothy Holsworth, claimed to have bought 587 BNT tokens from a digital exchange based in Singapore. Good luck proving the jurisdiction on that one!

The Disappointing Evidence

Surprisingly enough, Judge Hellerstein ruled that Holsworth failed to present any evidence showing that the BNT tokens lost value. According to his ruling, “The federal securities laws do not reach a purchase and sale outside the United States.” So, it looks like if you’re planning on trading crypto in another country, you might just have to stick to the local laws!

Oh, And About That ICO

To make matters worse for Holsworth, he didn’t convincingly argue that his token purchases were tied to Bancor’s sizable $153 million initial coin offering (ICO) back in 2017. The evidence trail just fizzled out, leaving the plaintiffs with empty pockets and unanswered questions.

A Broader Legal Landscape

This ruling joins a trend of similar cases being filed by the dynamic duo of Roche Cyrulnik Freedman and Selendy & Gay. Their sights aren’t just set on Bancor; they’ve also filed suits against heavyweight crypto players including Binance, BitMEX, and KuCoin. Talk about ambitious legal representation!

Another Case in the Queue

Adding another layer of intrigue, these law firms are also involved in high-stakes litigation against Craig Wright, the self-proclaimed creator of Bitcoin, over a staggering $1.1 million Bitcoin inheritance. The estate of Ira Kleiman believes that Wright owes them a serious chunk of change. If that saga unfolds anything like the Bancor case, we’re in for quite the ride.