A U.S. federal court has allowed HelbizCoin investors to proceed with a class-action lawsuit against HelbizCoin creators, alleging fraud and violations of securities laws. The lawsuit has been ongoing for nearly three years, with investors claiming that HelbizCoin was a fraudulent scheme. The court partially sided with the investors, dismissing some claims while allowing others to proceed.
Investor Lawsuit Against HelbizCoin Creators Moves Forward
In a significant legal development, a U.S. federal court has granted HelbizCoin investors the green light to file a class-action lawsuit against the creators of HelbizCoin. The lawsuit alleges fraud and violations of securities laws, and it has been in progress for nearly three years.
Background on HelbizCoin
HelbizCoin has its origins in HelBiz, an Italian electric scooter-sharing company that conducted an Initial Coin Offering (ICO) in 2018, raising approximately $38.6 million. During this ICO, Helbiz issued an ERC-20 token, with one of Ethereum’s founders, Anthony Di Iorio, involved in the project.
Investors’ Allegations
A group of approximately 20,000 investors claims that HelbizCoin was essentially a fraudulent pump-and-dump scheme. They argue that the company employed deceptive tactics, making false promises and statements to entice people to invest in the cryptocurrency. Furthermore, investors contend that Helbiz retained the proceeds from the ICO for its own benefit.
Court’s Decision
On September 1, the U.S. District Court for the Southern District of New York delivered its decision in the ongoing lawsuit. The court’s ruling was mixed, partially favoring the investors.
The court decided to dismiss all claims against certain defendants, including Paysafe, Skrill, Decentral, and Alphabit, citing a lack of personal jurisdiction over Paysafe and Alphabit. Additionally, various claims, such as those related to breach of contract, tortious interference, and specific securities, were also dismissed against the remaining defendants due to insufficient supporting evidence.
However, the court found that the plaintiffs’ claims related to fraud, price manipulation, violations of securities laws, commodities laws, the RICO Act (Racketeer Influenced and Corrupt Organizations Act), and unjust enrichment against some defendants were valid. Importantly, the court determined that the ERC-20 token at the center of the dispute qualifies as a security under federal law.
The Path Forward
With this pivotal ruling, the HelbizCoin lawsuit is set to proceed, allowing investors to pursue their claims of fraud and securities law violations against the relevant parties. This legal development highlights the increasing scrutiny and legal accountability within the cryptocurrency space, particularly concerning ICOs and token offerings. The outcome of this case may have broader implications for the regulation and classification of digital assets in the United States.