Author: Duane Morris

By Justin R. Donoho

This year has already been a busy one in the crypto class action litigation landscape. It has seen several significant court decisions that have continued to shape the law in this growing area, including decisions on dispositive motions and motions for class certification. There have also been several multimillion-dollar crypto class action settlements. In addition, dozens of new crypto class action cases have been filed, auguring a continued trend of further development in this area.

For example, courts in the U.S. Court of Appeals for the Second Circuit issued key decisions holding that whether the operator of a crypto exchange may be held liable under federal securities laws for the sale of unregistered securities turns, as an initial matter, on whether the exchange is “centralized,” meaning that it intermediates and transacts between the buyer and seller, or is “decentralized,” meaning that the operator merely develops automated computer codes (aka “smart contracts”) that facilitate the transfers. See Risley v. Universal Navigation, 2025 WL 615185, at *1 (2d Cir. Feb. 26, 2025); Underwood v. Coinbase Global, 2025 WL 438547 (S.D.N.Y. Feb. 7, 2025). These decisions found that a decentralized exchange was not plausibly alleged to be a statutory seller under Section 12(a)(1) of the Securities Act, whereas a centralized exchange was plausibly alleged to be a statutory seller. The district court ordered bifurcated discovery and front-loaded resolution of the latter issue, subsequently ruling on a motion to compel and providing guidance as to what types of documents from both sides are pertinent to the question of whether a centralized exchange acted as a statutory seller with respect to users of the exchange who transacted in tokens. See Underwood v. Coinbase Global, 2025 WL 1984293 (S.D.N.Y. July 17, 2025).

Although some courts such as the ones deciding the cases mentioned above continue to punt on the issue of whether the transaction at issue is the sale of an unregistered “security,” instead focusing on other potentially dispositive issues, the issue of whether a crypto asset or transaction is a “security” continues to remain hotly contested. This issue is also an open one with respect to a wide variety of crypto assets and transactions, although 2025 saw a bit of clarity pronounced on the issue by Congress, two federal court decisions, and the SEC, as follows:

• Congress passed the GENIUS Act, which provides that fiat-backed stablecoins (as opposed to crypto-backed stablecoins or algorithmic stablecoins) are not securities. The GENIUS Act does not provide that any transactions cannot be securities, however. As a federal decision issued in 2025 observed, anything of value—from digital assets to citrus groves—may or may not be sold pursuant to “investment contracts,” a form of security. 
  
• A district court found that the sale of fiat-backed stablecoins during a de-pegging incident when the stablecoin became untethered to the fiat did not count as a security, pursuant to the multifactor test enunciated by the U.S. Supreme Court in SEC v. W.J. Howey, 328 U.S. 293 (1946), for what constitutes an investment contract, a type of security. The Howey test continues to frame many district courts’ analyses of whether crypto transactions are securities.
  
• Another district court issued a Rule 62.1 indicative ruling that reaffirmed its prior finding on summary judgment that a seller’s sale of bridge tokens to institutional investors was the sale of an unregistered security, rejecting the parties’ citation to a change in SEC policy as a justification for the court to vacate its prior-issued injunction and reduce a $125 million civil penalty.
  
• The SEC issued informal guidance offering its views that: transactions in fiat-collateralized stablecoins are not securities so long as they are not either investment contracts under the Howey test or notes, another type of security, under the multifactor test in Reves v. Ernst & Young, 494 U.S. 56 (1990); although “typical” meme coin transactions are not securities, any meme coins or transactions with “unique features” may be a security under the Howey test; and certain proof-of-work network protocol mining activities and certain proof-of-stake blockchain protocol staking activities are not securities.

Two district courts issued crypto class certification decisions in 2025, granting them in part on the claims for sales of unregistered securities, thus demonstrating another reason that claims for the sale of unregistered securities in violation of federal and state securities laws continue to be popular with the plaintiffs bar. Specifically, in addition to not needing to prove fraud, plaintiffs bringing claims for sales of unregistered securities also do not have all the commonality and predominance issues that usually accompany fraud claims and other claims. For example, these same decisions denied class certification on plaintiffs’ claims brought consumer protection statutes and claims for unjust enrichment.

This year has also seen several large settlements reached in crypto class actions, ranging from about $3 million to $13 million.

Finally, in the first eight months of 2025, dozens of class actions involving crypto assets, technologies, and ecosystems were filed against token issuers, promoters, and sellers; developers and operators of blockchains, crypto software, and fintech platforms; centralized and decentralized crypto exchanges; bitcoin ATM operators and more, alleging sale of an unregistered security in violation of federal and state securities laws (a popular claim that allows for rescission and does not require proof of fraud but proof of a security); many types of misstatements and omissions in violation of state consumer protection laws, federal and state securities laws, and allegedly amounting to common-law fraud; data breaches and invasions of privacy; and numerous miscellaneous claims including breach of contract, unjust enrichment, negligence, replevin, conversion, violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), and other claims.

In sum, with crypto assets continuing to proliferate and the current presidential administration reducing enforcement priorities relating to sales of crypto assets, crypto class action litigation is multiplying. We should expect to see an upward trend of key decisions and new cases in the remainder of this year and beyond, as this burgeoning area of the law continues to unfold.

Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.

Disclaimer: The content provided is for informational purposes only and does not constitute financial, investment or legal advice. While our law firm has substantial experience in cryptocurrency law and regulation, we do not offer advice or opinions on cryptocurrency as an investment. Consult a financial advisor before investing