Johnson Fiste has given an ultimatum to investors till February 20, 2018 to join a class action suit against The Crypto Company and other digital currency firms.
Johnson Fistel has accused Crypto of making false and misleading statements to its investors, who bought common stock between August 21 and December 18, 2017.
The proceeding takes aim at the company for its failure to disclose that “(1) Crypto unlawfully engaged in a scheme to promote and manipulate the Company’s stock; and (2) as a result, Crypto’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.”
The firm says it will seek damages on behalf of all investors in Crypto.
Johnson Fistel, which has offices in California, New York, and Georgia, is simultaneously conducting investigations into other private or publicly held cryptocurrencies.
Cryptocurrency Scams on the Rise
The rapid ascent of cryptocurrency and the exponential growth of the blockchain and digital currency market have led to a surge in scams and other illegal schemes in the industry.
Recently, Commodity Futures Trading Commission (CFTC) arranged formal charges against Cabbage Tech Corp and its executive Patrick McDonnell for alleged fraud and misappropriation in connection with the purchase and trading of Bitcoin and Litecoin.
If proven guilty, McDonnell will pay restitution to customers, including civil monetary penalties, and is also facing trading bans from the CFTC and other regulatory bodies.
On Wednesday, Bitconnect said it would shut down its operations after receiving two cease and desist letters from the Texas State Securities Board and one from the North Carolina Secretary of State Securities Division. The exchange said the continued bad press it is receiving “has made community members uneasy and created a lack of confidence in the platform.”
Bitconnect has long been suspected of running a Ponzi scheme.