The entire crypto market has changed a lot since last year. In 2017, we’ve been able to see Bitcoin reach near $20K. However, today, Bitcoin is only floating around $6,500. In addition to this, the entire crypto market has lost almost 80% since its all-time high in January.
And considering the bearish market, many investors may have already regretted their decision to buy cryptos even if they don’t have a full understanding of the risks involved. According to a report presented by Lex Machina, a legal analytics company, cryptocurrency lawsuits have tripled in the first two quarters of the year compared to the entire of 2017. Can this be considered a buyer’s remorse?
Last year, there were only 15 cases that mention Bitcoin, cryptocurrency, or blockchain. However, so far this year, we already have around 45 cases that are related to blockchain. This means that we can still potentially see six times more cases related to blockchain if this trend continues.
Cases Handled by the US Securities and Exchange Commission
Around 33% of the cases filed in the US in 2018 are handled by the US Securities and Exchange Commission. And this isn’t exactly surprising considering the announcement of the current chairman of the agency saying that it is going to have a crackdown on the sector. When Clayton was nominated to the position in January last year, things have started to pick up.
Another thing that is quite obvious is the fact that the number of cases increased as the price of Bitcoin fell. For instance, there were only seven cases that have related to Bitcoin, cryptocurrency, or blockchain in the fourth quarter of last year when Bitcoin was able to hit near $20k level in mid-December. However, during the first quarter of the year, it has already more than tripled.
According to the report: “The first two quarters of 2018 saw a significant rise in the number of securities cases relating to cryptocurrency or Bitcoin,” the legal analytics firm wrote in a statement. “Using Legal Analytics’ keyword search functionality, Lex Machina discovered case filings relating to this emerging area surged from seven cases in Q4 2017 to 22 cases in Q1 2018 Q1 and 23 cases in Q2”.
Ripple Labs is among the companies that have been at the end of high profile lawsuits. And for this reason, it may have contributed to the decision of the US Securities and Exchange Commission to not include Ripple as a commodity.
Bitconnect is another company that is on the receiving end of lawsuits. Bitconnect has been accused of running a Ponzi scheme. One of the lawsuits was filed in Kentucky.
The crypto market is currently struggling. A few days ago, Ethereum has lost 45% of its value in just a span of 30 days. It is true that some crypto-related lawsuits today can be considered buyer’s remorse. However, there are a lot of crypto projects that can be considered a scam. In fact, agencies have put up warnings over the possibility that you are dealing with a scam. According to reports, 1 out of 5 ICOs can be considered a scam.