Lawsuit against Crypto-currency Exchange dismissed by US District Court

Aryan Grover

A class action lawsuit was instituted against the BProtocol Foundation (Bancor) for the alleged unregistered offering of token securities. This lawsuit has now been dismissed by the US District Court in the Southern District of New York. As per guidelines, securities need to be registered with the Securities and Exchange Commission (SEC) of the United States.

Law firms Roche Cyrulnik Freedman LLP and Selendy & Gay, PLLC had filed a number of class actions against crypto currency exchanges and issuers, out of which this was one.

The plaintiff Timothy Holsworth had bought 587 BNT tokens, put on sale by Bancor for an aggregate cost of $212.50, on a digital exchange in Singapore. Bancor, a Swiss company was alleged to have solicited individuals to purchase the BNT tokens on secondary markets, the token having been claimed to be a security. Holsworth raised these allegations in a 193 page second Amended Complaint (SAC) against Bancor and other defendants in the United States District Court.

The lawsuit, however, was dismissed on multiple grounds. It was held that Holsworth lacked standing in court since he failed to prove that the BNT tokens purchased were sold at a loss, thereby causing an injury. The court noted various inconsistencies in the pleading, which included a lack of connection between the defendants’ sale and Holsworth’s purchase and the lack of privities between the defendants and Holsworth, as well as the passage of a one-year statute of limitations.