⚖️ Regulation & Legal: Crypto Lawsuits

The Duane Morris LLP report outlines a marked uptick in class action suits against crypto exchanges and wallet providers in 2025, driven by heightened scrutiny over AML/KYC compliance, investor protection, and misrepresentation of token valuations. Courts are increasingly applying securities law to digital assets, with several rulings affirming that certain tokens qualify as securities under the Howey test. This trend forces exchanges to tighten disclosure standards, adopt robust due diligence protocols, and maintain higher reserves for potential class‑action payouts, thereby compressing profit margins and reducing liquidity in the spot and derivatives markets. Geopolitically, the surge in litigation coincides with tighter regulatory frameworks in the EU’s Markets in Crypto‑Assets Regulation (MiCA) and the U.S. SEC’s expanded enforcement agenda. Investors’ risk appetite has moderated, leading to a 12% decline in Bitcoin and Ethereum trading volumes in Q2 2025.