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The most recent crypto winter has been accompanied a flurry of U.S. enforcement actions and private litigation. Authorities fined Bitmex $100 million and sanctioned Tornado Cash. A wave of class actions grew. FTX’s collapse and resulting fraud charges made headlines worldwide.
As legal threats grow, here’s a look at areas of increasing risk – and six principles to help crypto business leaders and investors navigate through turbulent waters.
Crypto Companies Face Escalating Civil and Enforcement Risk
Enforcement and litigation carry risks beyond penalties and costs. In addition to reputational costs and operational interruptions, enforcement can escalate into a bet-the-company problem that could even lead to jail time. And class actions increasingly target crypto enterprises regardless of government action. Threats continue to mount across the following areas:
For a glimpse into the future of crypto enforcement, look no further than the commodities futures markets. Having concluded a joint enforcement campaign targeting fraud, market manipulation and spoofing in the futures markets, the Department of Justice and Commodity Futures Trading Commission appear poised to focus on cryptocurrency markets.
Consider These Six Tips to Mitigate Risk