Report: Crypto Becomes ‘New Frontier’ in Securities Class Action Filings

Core federal filings related to cryptocurrency more than doubled from the previous year in 2022, setting a new record.

Source: Advisen | Published on February 8, 2023

Crypto SEC filings

According to a report from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, core federal filings related to cryptocurrency more than doubled from the previous year in 2022, setting a new record.

The number of cryptocurrency-related securities class actions filed increased by 109% in 2022, from 11 in 2021 to 23 in 2022. This is a new high, surpassing the previous year’s total of 14 filings.

“Crypto is the new frontier in securities fraud litigation,” said Joseph A. Grundfest, a former Securities and Exchange Commission Commissioner and the William A. Franke Professor of Law and Business (emeritus) at Stanford Law School. “The FTX implosion, along with the failure of many crypto intermediaries and the collapse of some crypto asset prices, will keep plaintiffs’ lawyers busy for years,” he added. If SPAC litigation is the past, crypto litigation is the future, at least for the time being.”

While core federal filings relating to cryptocurrency increased dramatically, overall securities class actions fell another 5% in 2022 after falling dramatically in 2020 and 2021.

The number of federal and state court securities class action filings fell from 218 in 2021 to 208 in 2022, a decrease from the 1997-2021 average of 228 filings. The slight decrease is largely due to a continued decline in federal merger and acquisition litigation. M&A filings fell 61% from 18 in the previous year to seven in 2022, a record low since Cornerstone began tracking the figures in 2009.

Despite the downward trend in filings, the report stated that the volume of filings will reach historic highs in 2022. Disclosure Dollar Loss (DDL) increased by 100% to $593 billion, with Maximum Dollar Loss (MDL) increasing by 138% to $2,433 billion.

“Total and average DDL were the highest on record,” said Cornerstone in the report “Securities Class Action Filings: 2022 Year in Review.”