Powers On... is a monthly opinion column from Marc Powers, who spent much of his 40-year legal career working with complex securities-related cases in the United States after a stint with the SEC. He is now an adjunct professor at Florida International University College of Law, where he teaches a course on “Blockchain, Crypto and Regulatory Considerations.”
Well, well, well. It seems that some of those class-action law firms that ferret out possible securities claims in search of fees and recovery for investors, sometimes wrapped self-righteously in the flag of investor harm and rights, are properly receiving a cold shoulder from the federal courts in the Southern District of New York (SDNY). That is very good news for the nascent blockchain industry and for investors who own tokens in legitimate blockchain businesses like Bancor, Status and Quantstamp. It is important to highlight these court decisions, even though these decisions came down several months ago.
The overhang of class actions, just like when the United States Securities and Exchange Commission brings its own independent lawsuits, can be severe for both the individual founders named as defendants and the companies they built. They have caused financial and reputational damage from specious claims. It is thus gratifying to see that when two judges in the SDNY were faced with 190-plus page complaints in these lawsuits, they have so far independently determined that the complaints should be dismissed.