Investors in the cryptocurrency company HelbizCoin were recently victorious in a class-action lawsuit against HelbizCoin. The investors had accused HelbizCoin of running an initial coin offering (“ICO”) that was in violation of state securities laws. The presiding judge ruled in favor of the class, awarding them $5 million in damages.
The lawsuit stemmed from an ICO held by HelbizCoin in 2017. In an ICO, a company sells digital tokens in exchange for cryptocurrency or other digital assets. However, the investors alleged that HelbizCoin did not provide the required documentation with the ICO, leaving investors unaware of the risks involved. Additionally, according to the lawsuit, HelbizCoin knowingly misrepresented the value of its tokens and did not inform its investors about whether the tokens were registered with the Securities and Exchange Commission (SEC).
The ruling covers investors who purchased tokens at or after the start of the ICO on June 29, 2017. The lawsuit is now seeking to resolve issues with the class of investors as a collective. The ruling confirms that HelbizCoin misled its investors regarding the value of its tokens and must pay its investors recompense for their losses.
The court victory is a win for investors and for the emerging cryptocurrency industry as a whole. On the one hand, it signals to companies that they cannot manipulate the market by providing inadequate disclosures about their investments. On the other hand, it shows that investors of cryptocurrency can rely on the courts to protect their investments and that companies must abide by the legal framework created to protect investors.