Crypto and digital currencies have sparked a surge of financial lawsuits and cases in recent years, as governments around the globe strive to understand and regulate them. From taxation disputes to class-action suits brought by investors claiming mismanagement of exchanges, crypto and digital currency related legal actions are becoming more common. In this blog post, we’ll take a look at some of the most prominent crypto international financial law cases seen so far to illustrate how quickly these issues can evolve for regulators and citizens alike.
The first well-known case is United States v. Palma et al., which involved an accused cryptocurrency money launderer from Venezuela. In 2018, a federal grand jury indicted three individuals (Carlos Enrique Perez-Melara, Diego Alejandro Carrillo-Landaeta, and Mario Enrique Perez-Melara) for running a money laundering scheme utilizing the unregulated exchange BTCPesa. The defendants were charged with using BTCPesa to convert illicit cash into Bitcoin (BTC). According to court documents, it was determined that the defendants had sent approximately $2 million worth of BTC out of Venezuela in 2017/2018 in order to launder proceeds from drug trafficking activities.
Another high profile case revolves around the QuadrigaCX exchange collapse in 2019. QuadrigaCX customers filed multiple class action lawsuits against directors of the exchange after they discovered they could not access their accounts nor withdraw funds due to alleged mismanagement by its founders. The main allegations include breach of trust and negligence with respect to security measures put in place by QuadrigaCX’s board. There were also claims that the company either withheld or misappropriated user funds by transferring them into other wallets owned by its founders or affiliates without informing users about such transfers. Customers also claimed that there were inadequate protections against fraudulent activity on the platform itself or hacking attempts made against user accounts on QuadrigaCX’s servers.
Finally, there is the BitMEX prosecution case from 2020 involving accusations for failing to comply with US anti-money laundering regulations over its operations abroad between 2014 – 2020. Its co-founders Arthur Hayes, Ben Delo, and Samuel Reed have been charged with violating banking laws due to their involvement with providing financial services without proper authorization from US regulators and trading derivatives without authorization from US regulators; operating an unregistered trading platform; failing to implement anti-money laundering protocols; and unlawfully engaging American citizens while operating outside U.S jurisdiction.”
These examples demonstrate how quickly new technology can disrupt existing financial systems around the world and create unanticipated legal challenges for all involved parties as countries struggle to come up with reasonable regulatory frameworks for such disruptive products. Crypto international finance is likely here to stay, but it remains unclear how traditional systems will adjust when confronted with rapidly evolving digital assets such as cryptocurrencies or blockchain technology projects backed by tokens or other digital tokens representing value on distributed ledgers maintained through decentralized networks controlled by consensus algorithms rather than central authorities like banks or governments.”