Crypto Lawsuits Are on the Rise —Here’s What You Need to Know
Cryptocurrency was supposed to be the wild west of finance—decentralized, borderless, and free from government control. But as the industry matures, so do the legal battles. Investors are suing exchanges, regulators are cracking down, and smart contract disputes are making their way into courtrooms.
So, what happens when a crypto deal goes south? Whether you’ve been scammed, locked out of an exchange, or caught in a regulatory investigation, knowing your legal rights is crucial. Here’s what you need to know about cryptocurrency litigation and dispute resolution.
The Most Common Cryptocurrency Disputes
Crypto legal cases aren’t just about lost Bitcoin or failed ICOs anymore. The landscape has evolved, and the legal issues are becoming more complex. Some of the biggest disputes involve:
- Fraud and Ponzi Schemes – With the rise of rug pulls and pump-and-dump scams, many investors find themselves victims of fraudulent crypto projects. If a project vanished with your money, there may be legal options for asset recovery.
- Case Study: The SEC charged Terraform Labs with a $40 billion securities fraud case after its stablecoin, TerraUSD, collapsed. Read more.
- Breach of Contract – Many crypto agreements happen through smart contracts or informal online deals. When a party fails to deliver, disputes arise. If a developer promised an airdrop and didn’t follow through, or a business deal broke down, legal action might be necessary.
- Legal Insight: Courts are still debating whether smart contract disputes should be settled traditionally or through blockchain arbitration. Harvard Law Review.
- Exchange and Wallet Issues – Major platforms have gone bankrupt or frozen customer assets, leaving users locked out of their funds. If you’ve had money stuck in an exchange, you may have grounds to recover it.
- Example: The collapse of FTX left thousands of users stranded. Lawsuits are ongoing against Sam Bankman-Fried and FTX executives. DOJ Case Details.
- Regulatory Crackdowns – The SEC, CFTC, and IRS are tightening their grip on crypto. If you’re being investigated for unregistered securities, tax evasion, or anti-money laundering violations, you’ll need a strong legal defense.
- Latest Crypto Lawsuits: The SEC sued Binance and Coinbase in 2023, claiming they offered unregistered securities. SEC’s official filing.
Can You Sue Over Crypto Losses?
The short answer? Yes—but it’s complicated.
Unlike traditional banking, crypto transactions aren’t FDIC insured, and many disputes cross international borders. If your funds were stolen, lost due to exchange negligence, or blocked by government action, you may have legal options, but success depends on several factors:
- Jurisdiction – Where was the transaction made? Who controls the platform?
- Regulations – Is crypto legally recognized in the country where you’re filing suit?
- Proof of Ownership – Can you verify the lost funds and trace transactions on the blockchain?
Some victims have successfully recovered funds through lawsuits, while others hit legal dead ends due to the decentralized nature of crypto.
For a deeper look into investor protections, check the SEC’s investor protection page.
How to Protect Yourself from Crypto Legal Trouble
If you’re investing in or running a crypto business, being proactive is your best defense. Here’s how to stay out of legal trouble:
- Use Regulated Platforms – Avoid shady exchanges that lack proper oversight. If a platform isn’t registered with the SEC, CFTC, or FinCEN, consider it a red flag.
- Get Contracts in Writing – Whether it’s an NFT deal, a token launch, or an investment agreement, have clear legal contracts (not just blockchain transactions).
- Stay Tax Compliant – Report your crypto earnings. The IRS is cracking down on undeclared crypto income and DeFi transactions. Check the IRS guidelines.
- Work with Crypto-Savvy Lawyers – If you’re facing a dispute, regulatory inquiry, or exchange issue, having an attorney familiar with blockchain law can make all the difference.
Final Thoughts: The Future of Crypto Litigation
Cryptocurrency isn’t a lawless space anymore. As adoption grows, so do the legal battles—investors, businesses, and regulators are all adapting to this new reality. Whether you’re dealing with a scam, a contract dispute, or a government investigation, knowing your legal options is key to protecting your assets.
If you find yourself in a crypto-related legal dispute, getting the right legal guidance can be the difference between recovering your funds or losing everything. For legal assistance with cryptocurrency disputes, consulting an experienced attorney is the best first step.
Let a Digital Assets Attorney Help
Do you have more questions about crypto and the law? Our team at Montague Law can provide you with the answers you want. You can easily contact one of our digital asset attorneys by calling us at 904-234-5653. Allow us to walk you through each step of this legal process.