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Monkey Capital Cryptocurrency Fraud and Unregistered Securities Class Action

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At issue in this class action are nearly $4 million worth of investments the plaintiffs believed they were making into a new cryptocurrency prior to its initial coin offering (ICO). The investments were made primarily in bitcoins. The complaint contends that cryptocurrencies are actually unregistered securities and asks for relief from Monkey Capital’s alleged wrongdoing on that basis.

The Nationwide Class for this action is all Monkey Capital investors who, between June 1, 2017 and October 31, 2017, transferred bitcoins or other money, currencies, or cryptocurrencies to Monkey Capital in furtherance of its ICO. There is also a Florida Subclass of the above class.

According to the complaint, Monkey Capital, Inc. is headquartered in Singapore; Monkey Capital, LLC was created in or around July 2017 as “a new parent company to hold [all] interest in the [investment] entity.” Both are believed by the complaint to be controlled by founder Daniel Harrison. All three are defendants in this case.

Monkey Capital was supposedly creating the Monkey Capital Market, which the complaint calls “a unique, inter-connected network of cryptocurrency news and information; a platform on which cryptocurrency could be exchanged for other cryptocurrency or fiat currency…; and communication channels…” along with it would operate “a decentralized hedge fund to invest in items such as SpaceX supply contracts and hostile public company takeovers and Blockchain systems while simultaneously speculating on large blocks of cryptocurrency.”

According to the complaint, investors were invited to exchange cryptocurrency like bitcoin for cryptocurrenecy options called Coevals that they would later be able to exchange for Monkey Coins. The complaint alleges that Harrison and his colleagues extensively hyped the company, and investors began buying the Coevals, which, without the launch of Monkey coins, had only “a de minimis value.”

The ICO was postponed to August 8, 2017. Before the ICO, on or about April 3, 2017, the defendants, without warning, issued a billion Monkey coins to Monkey insiders, including Harrison, who the complaint claims quickly converted them to other cryptocurrencies.

Unfortunately, the complaint claims that on August 8, no ICO took place, and that at about the same time, Monkey’s fundraising website disappeared. The complaint alleges that the investments made in Coevals went directly into Harrison’s pocket and that no ICO will ever take place.

Some investors have now traded Coevals for another cryptocurrency called ERC20, but the complaint claims that the defendants “are threatening to forcibly remove tokens from investors if the investors do not purchase ‘insurance’ from Defendants.”

The complaint claims that cryptocurrencies are securities and claims that the sales of Coevals was an unregistered offer and sale of securities and fraud, among other things, in violation of the Securities Act of 1933 and Florida state laws.

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