Unfortunately, misrepresentation and outright fraud are rampant in the blockchain world, especially with coin and other fungible token offerings and NFT sales. The old adage ‘buyer beware’ certainly applies. But just because this new and emerging market is high-risk does not mean you don’t have rights if the founders of a blockchain company, token sale, or NFT sale knowingly or unknowingly provide false information as part of their sale. Traditional legal principles apply, including breach of contract, innocent misrepresentation, fraud, and negligence. If the offering is a security as defined by the SEC, you may have additional legal rights and leverage. While your primary weapon against fraud is due diligence before you purchase a token or NFT, you may need a lawyer to help you if you are a victim of false presentations or other breaches of duty by the companies and people behind these offerings.
There are an endless set of legal issues related to token offerings, ICOs, and NFT sales. Blockchain, NFT, and crypto litigation attorneys are going to be very busy in the coming years. Getting sued will become more common when things go wrong. If you are worried about legal compliance with your blockchain offering or have questions about a token or NFT you purchased, you should probably speak with a blockchain lawyer with experience in complex litigation to reduce your risk of getting hit with a lawsuit. Below is a list of lawsuits filed in the crypto and NFT space (we will update regularly):
NFT, crypto, and blockchain technology is still new. Adoption is still in its infancy. Most new emerging technologies are given a grace period before lawsuits start to scale up. We have seen an uptick in litigation being filed in the fungible token and nonfungible token space. Despite problems of fraud, rug poles, project misrepresentations, missed deadlines, possible securities violations, selling NFT without the proper copyright ownership, selling counterfeit NFTs, failing to provide project deliverables, misrepresentations to investors, and many other issues, litigation has been slow to be filed. As adoption continues to grow, the tolerance for breach of contract, fraud, misrepresentation, scams, and breaches of fiduciary duty is rapidly declining. Investors in NFT projects, token purchasers, and government agencies are all scaling up on litigation. This trend is expected to continue as the market matures. Protecting your crypto, Blockchain, and NFP project against legal risks has become far more important.
Litigation reduction needs to start early, and hopefully before the crypto or NFT project launch. There are near endless ways lawyers can reduce the risk of getting sued. Lawsuits are expensive, distracting, and can bring an end to your crypto project. The ROI on getting expertise and good legal advice is a certainty. Here are some examples of risk reduction strategies to avoid having to hire a litigation attorney after the fact:
An initial coin offering (ICO) is an event where a company sells a new cryptocurrency to raise money. Investors receive cryptocurrency in exchange for their financial contributions. The primary difference between ICOs and IPOs is that IPOs involve selling highly regulated securities overseen by the Securities and Exchange Commission (SEC). There are significant disclosure requirements and investors must be qualified, typically having assets worth more than $1,000,000. ICO’s are currently not regulated by the SEC, although regulations are likely coming for coin offerings that are considered securities. Many crypto companies identify their tokens as ‘utility’ tokens in order to avoid regulatory oversight. Our attorneys expect a growing number of lawsuits and litigation around ICOs.
The Attorneys at Traverse Legal has been globally recognized for their experience and results. We can provide legal expertise for a variety of industries and practices areas such as blockchain, cryptocurrency, NFTs, and smart contracts. We handle IP and technology litigation for plaintiffs and defendants involving crypto, blockchain, and NFT issues. Contact our team today!