MSTR Cat

Crypto Law/Level IX · Death, divorce and disputes/9.3 Going to court/Lesson 3

Class actions

How one lawsuit can speak for thousands of crypto buyers: the Rule 23 tests, lead plaintiffs in securities cases, notice and opting out, settlements, and crypto class actions that succeeded or failed.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Doing nothing keeps you in the class at no cost, but you are bound by the result; file the claim form before the deadline, because members who miss it can be bound without receiving anything.
  2. Verify any notice on the court docket before acting: CourtListener is free and PACER charges $0.10 a page, capped at $3 per document, with no bill if quarterly use is $30 or less.
  3. Members may object to a settlement under Rule 23(e) without leaving the class; opt out only if an individual claim is large enough to pursue alone, since exclusion means carrying all costs yourself.
  4. Class members pay no lawyer upfront: class counsel’s fees come from any recovery with court approval under Rule 23(h); securities class members may move for lead plaintiff within 60 days of the published notice under 15 U.S.C. §78u-4.
  5. A genuine claims process never asks for a recovery phrase or an upfront fee; keep purchase records, because payouts depend on proving when and how much was bought.

MaterialsFederal Rule of Civil Procedure 2315 U.S.C. 78u-4 (Private Securities Litigation Reform Act lead-plaintiff procedure)Risley v. Universal Navigation Inc., No. 23-1340 (2d Cir. 26 February 2025)Any class notice you have received, together with the court docket it refers to

Wonder

  1. Am I part of a class action without ever signing up?
  2. What happens if I opt out of a class?
  3. Why are so many crypto class actions dismissed?

Explore

  1. A class action lets one or a few named plaintiffs sue on behalf of everyone in the same position, so that thousands of small claims can be decided together. In US federal court, Rule 23(a) of the Federal Rules of Civil Procedure sets four prerequisites: the class is so numerous that joining everyone is impracticable; there are questions of law or fact common to the class; the representatives’ claims are typical of the class; and the representatives will fairly and adequately protect its interests. Lesson 5.3.2 shows how such suits target paid promoters; this lesson covers the procedure that applies to every kind of defendant.
  2. Most damages class actions must also meet Rule 23(b)(3): common questions must predominate over individual ones, and a class action must be superior to other ways of deciding the dispute. That test often bites in crypto fraud cases, where buyers saw different statements at different times. Members of a (b)(3) class must receive notice stating that the court will exclude any member who requests exclusion, and how and when to do so. A member who does nothing is bound by the judgment or settlement; one who opts out keeps the right to sue separately, but alone. Settlements need court approval under Rule 23(e), and members may object.
  3. Securities class actions add a statutory layer. Under the Private Securities Litigation Reform Act, codified for Exchange Act claims at 15 U.S.C. 78u-4, the first plaintiff must publish notice to the class within 20 days of filing. Any class member may then move to be lead plaintiff within 60 days of that notice, and the court appoints the ‘most adequate plaintiff’ to direct the case. Separately, the Class Action Fairness Act, in 28 U.S.C. 1332(d), lets federal courts hear class actions where more than $5,000,000 is in controversy and any class member is a citizen of a different state from any defendant.
  4. Crypto class actions have produced recoveries. In re Tezos Securities Litigation, one of the first suits to bring Securities Act claims over an initial coin offering, concerned a July 2017 token sale. In August 2020 Judge Richard Seeborg of the Northern District of California gave final approval to a $25 million settlement paid by the Tezos Foundation. Settlements like this are paid out by an administrator to class members who file valid claims before a deadline, so recovery often depends on records that prove when and how much someone bought (lesson 2.3.7). Members who miss the claims deadline can be bound by the settlement without receiving anything.
  5. Many crypto class actions fail early. In Risley v. Universal Navigation Inc., buyers of scam tokens traded through the Uniswap protocol sued its developer. On 26 February 2025 the Second Circuit affirmed dismissal of their federal securities claims, saying it ‘defies logic’ that a drafter of a smart contract could be liable under the Exchange Act for a third party’s misuse of the platform, but sent the state-law claims back. On 2 March 2026 the district court dismissed those too, holding that running a marketplace was not ‘substantial assistance’ to the issuers’ fraud. Customers bound by an arbitration clause with a class waiver usually cannot join a class at all (lesson 9.3.2).
  6. A class notice is a legal document that names the court, the case number, the class definition and the deadlines. Because recovery scams imitate official-looking messages (lesson 4.2.5), it is worth checking any notice against the court record before acting on it. A practical check: if you receive a notice about a crypto class action, find the case on the court’s docket through PACER or the free CourtListener archive, confirm the settlement administrator’s website from the filed notice itself, and write down the deadlines for claims, objections and exclusion. A genuine claim process will not ask for a seed phrase or a fee to join.

Key facts

  • Rule 23(a) requires numerosity, commonality, typicality and adequate representation before a federal class action can proceed.
  • For a Rule 23(b)(3) damages class, common questions must predominate and a class action must be superior to other methods.
  • Notice to a Rule 23(b)(3) class must tell members that the court will exclude anyone who requests exclusion, and how and when to do so.
  • Under 15 U.S.C. 78u-4, notice of a securities class action must be published within 20 days of filing, and class members have 60 days to seek appointment as lead plaintiff.
  • In August 2020 a federal court in California gave final approval to a $25 million settlement of the Tezos initial coin offering class action.
  • In Risley v. Universal Navigation Inc. (2d Cir. 2025) the court affirmed dismissal of federal securities claims against the Uniswap protocol’s developer over scam tokens.

Exercise nine, six, three, one

9CollectList up to 9 crypto class actions, class notices or settlements you have heard of or received, with the court and case name where known (some lists are shorter).
6ClusterSort them into 6 groups: securities claims against issuers, claims against exchanges, claims against promoters, claims against developers, settled cases, and dismissed cases.
3DistillReduce the 6 groups to 3: cases where you might be a class member, cases blocked by arbitration or dismissal, and cases you would need to verify on a docket.
1CrystallizeWrite 1 sentence explaining what a class member gives up and keeps by doing nothing when a class is certified.

Fact check

Dates, figures and claims checked against the published sources listed below.

Open in the interactive academy →

PT ES ZH JA KO RU DE FR MS