Online Feature

Suing for a Bit(coin) of Justice—Class Actions and the Role of Technology in Morrison Extraterritoriality Analysis

Edmund H.S. Brose

In the wild west of crypto, courts are slowly coming to realize that crypto assets present novel questions of law that challenge core assumptions of United States securities law. This online feature argues that a more comprehensive understanding of blockchain technology counsels courts to apply the antifraud provisions of the federal securities laws extraterritorially. Such a move will economize judicial capacity, deter fraud, and protect U.S. investors. Instead of relying on a nodular analysis, courts should look to the policy rationales of the Court’s Morrison decision, as well as the Second Circuit’s Absolute Activist opinion, to lead out of the jurisdictional morass of locating crypto transactions. In addition to relying on enumerated factual allegations laid out in Absolute Activist, courts should find that transactions occur where the parties are physically located rather than where the physical structure that underlies the crypto network is located. Further, they should utilize a plus factor of whether the company has marketed the product into a jurisdiction. As a result, courts can dispense with legal fiction and preserve the aims of the Morrison ruling. As private class actions only continue to increase in number, the time to develop a consistent and encompassing rationale is now.