Judge Worries Plaintiffs' Lawyers Trying to Line Their Pockets in Block.one ICO Lawsuit
The U.S. district judge criticized some plaintiffs in a class-action lawsuit against Block.one for appearing to be an attempt to earn high legal fees.
Aug 6, 2020 at 10:37 a.m. UTCUpdated Aug 19, 2021 at 3:32 a.m. UTC
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A judge choosing the lead plaintiff in the Block.one lawsuit has expressed concern some parties appear to be there primarily for the promise of high legal fees.
- Earlier this week in New York, U.S. District Court Judge Lewis Kaplan said a class-action lawsuit for five investors showed a distinct lack of diligence and commitment that made them unsuitable to become the lead plaintiff in the Block.one lawsuit.
- Known as the "Williams Group," Judge Kaplan said the plaintiffs had submitted incomplete, inaccurate and unsubstantiated trading data that failed to show how much money they lost from investing in the EOS initial coin offering (ICO).
- For example, trading data submitted from one of the plaintiffs shows he allegedly sold more than 3,000 eos tokens than he had actually bought.
- Judge Kaplan added that Token Fund I, one of the plaintiffs, failed to provide evidence of trading losses and was only set up two days before it filed a motion to become lead plaintiff, suggesting it was created as a vehicle specially for this lawsuit.
- A decision to remove a couple of plaintiffs at the last minute "raises further concerns that the application is being driven by the lawyers, rather than the plaintiffs," Judge Kaplan added.
- The lead plaintiff's case represents all other plaintiffs with similar suits and is the only one that goes to court, meaning the lead plaintiff's lawyers pick up the legal fees.
- In the Block.one case, which alleges the EOS creator committed securities fraud, Judge Kaplan said it was possible the suit could stretch on for many years, making it a lucrative prospect for the lead plaintiff's legal team.
- Instead of the Williams Group, Judge Kaplan chose the lawsuit from the Crypto Assets Opportunity Fund (CAOF), which was filed in May, as lead plaintiff, saying the fund had a bigger financial interest and had actually supplied accurate and evidenced trading data.
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