Cryptocurrency Litigation On The Rise

The third quarter of 2022 has seen a dramatic uptick in incidences of federal cryptocurrency litigation. The common questions that are being asked of the courts are whether certain cryptocurrency assets are to be treated as a commodity and/or a security? Investment groups, the Commodity Futures Trading Commission (CFTC), and the Securities Exchange Commission (SEC) have begun filing a host of lawsuits across the federal district courts, five major lawsuits alone in the months of September 2022 and October 2022. Perhaps, this is indicative of an uptick in cases being filed across other jurisdictions.

What are Securities?

Before diving further, we should look to the Securities Exchange Act's definition of what a "security" is, and it is defined broadly to include, among other things, stocks, bonds, debentures, investment contracts, a variety of other instruments, or, "in general, any instrument commonly known as a 'security.'" 15 U.S.C. § 78c(a)(10). Yet,