May 20, 2020
by Daniel M. Payne

Tracking crypto cases over time can highlight interesting trends in litigation.  One trend we discovered is that a graph of crypto cases filed over time since 2011 is not dissimilar to a smoothed-out graph of the price of Bitcoin, with small incremental increases leading to an explosive spike followed by a sharp drop.  The Bitcoin spike occurred in 2017, and the litigation spike followed a year later.  This is no coincidence. 

As the price of Bitcoin and other cryptocurrencies increased and then spiked, more people and companies invested in digital assets.  When the so-called crypto winter followed, a lot of people and funds lost money.  This led to a spike in both private litigation and regulatory enforcement actions.  As unregistered ICOs dropped off, enforcement activity decreased as well, dropping the rate of litigation to its previous trajectory.  The above graph shows this return to the previous litigation trajectory that occurred in 2019.

In 2020, Bitcoin has held its value and appears to be weathering the coronavirus-caused recession well.  If this means that we have emerged from crypto winter, then crypto litigation should reach at least 2019 levels.  If Bitcoin spikes again, though, be prepared for another spike in crypto litigation.

About Blockchain Law Center

Blockchain technology utilizes a distributed digital ledger to record and track information, and can be leveraged to gain transparency and certainty in transactions ranging from cryptocurrency to supply chain tracking.  This blog provides information on the legal developments surrounding implementation of blockchain technology, with an initial focus on the financial services sector.