2 months ago
21 ARTICLE AD
The case highlights one of the many lawsuits filed by investors against service providers for financial losses in the volatile cryptocurrency market.
Key Notes
A US federal court has dismissed a lawsuit against Bancor, ruling that the exchange and its founders cannot be sued in the US due to jurisdictional issues.The court found that US securities laws do not apply to Bancor in this case.Judge Robert Pitman advised the plaintiffs to pursue their claims in Israel or Switzerland, where Bancor is based..A US federal court has dismissed a lawsuit filed by investors against Bancor, a decentralized exchange for buying and selling cryptocurrencies, over the suspension of an investment protection feature. The court ruled that Bancor, its founders, and related entities cannot be sued in the US due to jurisdictional issues.
On September 9, Judge Robert Pitman of the US District Court for the Western District of Texas adopted a magistrate judge’s recommendation to dismiss the class action suit. The magistrate judge concluded that Bancor, which operates out of Israel and Switzerland, does not have sufficient ties to the US for the court to exercise personal jurisdiction.
Additionally, the court found that US securities laws do not apply to Bancor in this case due to extraterritorial concerns, meaning US laws cannot be enforced beyond the country’s borders.
Investor Concerns over Feature Suspension
The lawsuit was filed by a group of US cryptocurrency investors who claimed that Bancor had suspended a key investment protection feature, which they argued exposed them to financial risk.
Bancor had introduced an impermanent loss protection feature in late 2020, designed to shield liquidity providers from market volatility. The platform compensated users for their losses by issuing its native token BNT which they could sell to recoup their losses. However, in June 2022, Bancor suspended this program, citing “hostile market conditions”.
As a result, liquidity providers who relied on this protection suffered permanent losses when the program was halted, prompting them to sue Bancor for removing the risk protection feature without proper notice.
After reviewing the case, Judge Pitman ruled that the investors failed to provide sufficient evidence showing that the cryptocurrency transactions occurred in the US or fell under US jurisdiction. He advised the plaintiffs to refile their claims in Israel or Switzerland, where Bancor and its founders are based.
Broader Implications for Crypto Litigation
The case highlights one of the many lawsuits filed by investors against service providers for financial losses in the volatile cryptocurrency market. Earlier this year, Canadian investors sued Binance, the world’s largest crypto exchange, for offering derivatives products in the region without proper regulatory authorization.
The plaintiffs in that case seek compensation for being misled into buying unregistered securities.
Binance is also facing similar regulatory challenges in the US, where investors sued the exchange for selling unregistered tokens that later lost value, causing them to suffer financial losses. The digital assets involved in the case include aelf ELF $0.37 24h volatility: 1.4% Market cap: $267.01 M Vol. 24h: $22.92 M , EOS EOS $0.49 24h volatility: 2.2% Market cap: $744.01 M Vol. 24h: $91.40 M , FUNToken FUN $0.0034 24h volatility: 2.8% Market cap: $35.54 M Vol. 24h: $990.71 K , Icon ICX $0.13 24h volatility: 3.3% Market cap: $129.55 M Vol. 24h: $3.39 M , OMG Network OMG $0.22 24h volatility: 1.6% Market cap: $31.34 M Vol. 24h: $4.61 M , Quantstamp [NC], and Tron TRX $0.15 24h volatility: -0.8% Market cap: $13.26 B Vol. 24h: $409.87 M .
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
