COURT REJECTS MULTIDISTRICT PUSH FOR CRYPTO FRAUD SUITS
Three investors filed separate suits against a digital-asset promoter, each alleging the same unregistered token sales and misleading marketing. Plaintiff Anthony Motto asked the Judicial Panel on Multidistrict Litigation to fold the cases into one proceeding in Chicago. The Panel refused, leaving the suits on separate tracks in Illinois, California, and Pennsylvania.
The motion argued that common questions of fact—chiefly whether the tokens qualified as securities and whether disclosures were adequate—warranted a single judge and shared discovery. Opposing defendants and some plaintiffs countered that the cases involved distinct marketing channels, different investor classes, and varying state-law overlays that would complicate, rather than streamline, coordination. The Panel sided with the opponents, holding that three actions are too few and the factual cores too localized to justify the administrative cost of centralization.
Because the suits remain independent, each court can set its own schedule, entertain unique state claims, and issue rulings that may contradict one another. Plaintiffs gain faster, tailored discovery, but lose the leverage of unified pressure; defendants avoid a single, potentially plaintiff-friendly forum yet face duplicative document requests. For the crypto market, the decision signals that scattered retail actions will not automatically be swept into nationwide MDLs, keeping litigation costs high and settlement dynamics fragmented.
The ruling leaves SEC enforcement theories untouched but underscores that private plaintiffs, not regulators, are driving the first wave of token-classification fights. Exchanges and DeFi protocols therefore face a patchwork of precedents rather than a unified standard, increasing compliance uncertainty while also preventing any single adverse decision from chilling the entire sector.
Traders should watch the Illinois Greene case most closely; its early motion practice may reveal whether judges in routine districts are ready to treat certain tokens as securities without waiting for the Commission.