Cryptocurrency & Securities Fraud

Material misrepresentations or omissions in connection with the offer or sale of securities—including cryptocurrency tokens that qualify as securities under applicable law—can give rise to claims under federal securities laws, Texas securities statutes, and common law fraud. In many cases, investment misrepresentations are accompanied by a scheme to defraud that may support civil RICO claims, which carry the potential for treble damages and attorney’s fees. The materiality of the misrepresentation and the investor’s reliance on it are key elements of these claims.

Private offerings—sales of securities to accredited or sophisticated investors without SEC registration under exemptions such as Rule 506 of Regulation D—are a frequent source of litigation. Disputes arise when investors allege they were misled about the nature of the investment, the use of proceeds, the issuer’s financial condition, or their own eligibility to participate. Both the SEC and Texas securities regulators actively investigate and pursue claims arising from defective private offerings, and private civil claims are available to investors who suffered losses.

The offer and sale of digital tokens—including initial coin offerings (ICOs) and token generation events—has been an area of intense regulatory scrutiny by the SEC and CFTC, as well as private litigation. Whether a token constitutes a security under the Howey test is often the threshold legal question, with significant consequences for the obligations of issuers, promoters, and exchanges. Investors who suffered losses in fraudulent or unregistered token sales may pursue claims for rescission, compensatory damages, and injunctive relief against responsible parties.

Brokers, advisors, and promoters in the securities and cryptocurrency markets owe duties of care and loyalty to their clients. Misconduct—including unauthorized trading, unsuitable investment recommendations, undisclosed compensation arrangements, and Ponzi schemes—can give rise to claims under FINRA arbitration rules, federal and state securities laws, and common law fraud. Victims of broker or promoter misconduct may recover actual losses, disgorgement of ill-gotten gains, and in egregious cases, punitive damages.