Lewis A. Kaplan, a United States Judge in the Southern District of New York, has rejected a $27.5 million settlement in an ongoing class-action lawsuit against blockchain development company Block.one.
The judge argued that lead plaintiff Chase Williams, who sued the firm for selling unregistered tokens between June 26, 2017, and May 18, 2018, could not adequately represent the interests of class action members.
According to the court order, the lead plaintiff represents a class of investors who purchased the company’s tokens, EOS, and ERC-20 compatible software during its initial coin offering (ICO) five years ago.
The order explained that some of the investors who participated in the ICO are from the U.S., and some transactions were subjected to the country’s securities laws.
Judge Kaplan noted that Williams, who fell under the two categories, agreed to settle the case on behalf of absent class members to receive equal treatment per unit of the coins purchased, whether the purchases were subject to U.S. federal securities law.
The class action settlement was rejected because Williams provided inadequate information regarding the number of local to foreign transactions made during the ICO purchase.
The judge explained that the plaintiff obtained data representing the total number of investors who participated in the sale from a study conducted by consulting firm Chappuis Halder stating that 15.3 million of the 42,3 million crypto traders worldwide are from the U.S.
The court argued that its expectations were not met regarding the amount of token purchased by the lead plaintiffs.
“In light of the questions regarding the proportion of Lead Plaintiff’s purchases of tokens which were domestic and therefore covered by the securities laws and are eligible for a damage award compared to the proportions of domestics purchases by the absent class members, the court now declines to certify the settlement class,” the court order reads.
