W<\/span><\/span>ith investors worldwide looking at a collective $1.5tn in recent cryptocurrency losses, a blizzard of class-action lawsuits are being prepared. One big question is: who, if anyone, is to blame \u2013 and who could be held to account?<\/span><\/p>\n With inflation and interest rates rising, the best-known cryptocurrencies have been hit with heavy and continuing losses: Bitcoin has lost more than 50% of its value this year; Ethereum, its largest rival, is down 65%; and the total value of crypto assets has dropped to less than $1tn from its November 2021 peak of $3tn. US federal regulators say <\/a>46,000 people have reported losing $1bn in crypto to scams since January 2021.<\/p>\n Given the millions poured into promoting crypto \u2013 often with celebrity endorsements \u2013 legal action after the crash was inevitable. Class-action lawsuits are already in the works. Kim Kardashian and the boxer Floyd \u201cMoney\u201d Mayweather Jr are being sued<\/a> for alleged false statements promoting the minor cryptocurrency EthereumMax.<\/p>\n The lawsuit alleges they encouraged followers to join \u201cthe EthereumMax community\u201d and that the token itself was a \u201cpump-and-dump\u201d scheme that deceived investors.<\/p>\n Charles Randell, head of the UK\u2019s Financial Conduct Authority, said in a speech<\/a> to an economic crime symposium that he couldn\u2019t say if the particular token was a \u201cscam \u2026 but social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation\u201d.<\/p>\n EthereumMax has described the legal claim as a \u201cdeceptive narrative\u201d.<\/p>\n Kardashian and Mayweather were hardly the only celebrities to pitch for crypto. In October last year \u2013 at the market\u2019s height, when bitcoin had a market cap of $1.14tn \u2013 the actor Matt Damon made his debut as the Crypto.com pitchman<\/a>, advising viewers that \u201cfortune favors the brave\u201d. The ad was seen as a turning point for crypto \u2013 a financial investment backed by a Hollywood A-lister.<\/p>\n Other digital assets are also under scrutiny. Earlier this month, the justice department charged<\/a> Nathaniel Chastain, a former employee with NFT marketplace OpenSea<\/a>, with wire fraud and money laundering in connection with a scheme to trade NFT [non-fungible tokens] assets.<\/p>\n \u201cNFTs might be new, but this type of criminal scheme is not,\u201d said US attorney Damian Williams. He said the charges demonstrated prosecutors\u2019 determination \u201cto stamp out insider trading \u2013 whether it occurs on the stock market or the blockchain\u201d.<\/p>\n But prosecuting fraud in the crypto arena is notoriously difficult. A number of prosecutions have been brought for theft, but prosecuting digital fraud runs up against a central, unresolved question: are cryptocurrencies securities?<\/p>\n The US definition of what is a security relies on something called the \u201cHowey test\u201d and derived from a supreme court ruling, Securities and Exchange Commission (SEC) v WJ Howey Co.<\/a> decided in 1946, long before the era of crypto.<\/p>\n![\"Floyd](\"https:\/\/i.guim.co.uk\/img\/media\/32e9eb0b2885448020ed049ea3cf9d8fd2236298\/0_250_5191_3115\/master\/5191.jpg?width=445&quality=45&auto=format&fit=max&dpr=2&s=41a487b051fcc96fc91520d155fca4af\")
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