Major Crypto Lawsuits That Redefined the Industry

The SEC v. Terraform Labs case centers around the dramatic collapse of two cryptocurrencies, TerraUSD and Luna, which wiped out around $40 billion in investor funds in 2022 and sparked a broader crypto market crash. 

The U.S. Securities and Exchange Commission (SEC) sued Terraform Labs and its founder, Do Kwon, accusing them of fraud for misleading investors about the stability of TerraUSD, which was marketed as a stablecoin pegged to the U.S. dollar. 

The SEC also alleged that Terraform falsely claimed its blockchain technology was used in a popular Korean mobile app to bolster credibility. A jury found both the company and Kwon liable for civil fraud in April 2024. 

Rather than proceed with a second trial phase to determine damages, Terraform agreed to a $4.47 billion settlement with the SEC. However, the SEC will likely recover little of that amount because it agreed to be paid only after the company compensates affected crypto investors during bankruptcy proceedings. 

Terraform, which filed for bankruptcy in early 2024, has since received court approval to wind down operations, estimating it can pay between $184.5 million and $442.2 million to creditors. Meanwhile, Do Kwon also faces criminal charges in both the U.S. and South Korea, though he has denied any wrongdoing.

2. DOJ v. OneCoin (2019–Ongoing): $25 Billion Ponzi Scheme

The DOJ v. OneCoin case is a major ongoing legal battle involving one of the largest cryptocurrency frauds in history, with an estimated $25 billion implicated. 

OneCoin was co-founded in 2014 by Ruja Ignatova (also known as the "Cryptoqueen") and Karl Sebastian Greenwood, who created and sold a fake cryptocurrency through a global multi-level marketing (MLM) scheme. 

They falsely promoted OneCoin as a revolutionary digital currency and compared it to Bitcoin, convincing millions of people worldwide to invest. In reality, OneCoin had no real blockchain or market value. 

Greenwood played a key role in promoting the scam, earning over $300 million, which he used to fund a lavish lifestyle. He was arrested in 2018, extradited to the U.S., and sentenced to 20 years in prison in 2023. 

Ignatova remains a fugitive and is on the FBI’s Top Ten Most Wanted list. The U.S. Department of Justice (DOJ) continues to pursue justice for over 3.5 million victims globally who lost more than $4 billion, making this case a landmark in financial and crypto-related fraud prosecutions.

$25 Billion Ponzi Scheme

The DOJ v. OneCoin case is a major ongoing legal battle involving one of the largest cryptocurrency frauds in history, with an estimated $25 billion implicated. 

OneCoin was co-founded in 2014 by Ruja Ignatova (also known as the "Cryptoqueen") and Karl Sebastian Greenwood, who created and sold a fake cryptocurrency through a global multi-level marketing (MLM) scheme. 

They falsely promoted OneCoin as a revolutionary digital currency and compared it to Bitcoin, convincing millions of people worldwide to invest. In reality, OneCoin had no real blockchain or market value. 

Greenwood played a key role in promoting the scam, earning over $300 million, which he used to fund a lavish lifestyle. He was arrested in 2018, extradited to the U.S., and sentenced to 20 years in prison in 2023. 

Ignatova remains a fugitive and is on the FBI’s Top Ten Most Wanted list. The U.S. Department of Justice (DOJ) continues to pursue justice for over 3.5 million victims globally who lost more than $4 billion, making this case a landmark in financial and crypto-related fraud prosecutions.

Between 2022 and 2024, FTX Trading Ltd. and its affiliate Alameda Research LLC faced a major lawsuit resulting in a $12.7 billion penalty, the largest recovery in Commodity Futures Trading Commission (CFTC) history. 

The U.S. District Court for the Southern District of New York issued a consent order that required FTX to pay $8.7 billion in restitution to customers and $4 billion in disgorgement, aiming to compensate victims of a massive fraud scheme led by FTX founder Sam Bankman-Fried and key insiders. 

FTX had misrepresented how customer assets were handled, claiming funds were safely held and segregated, when in fact they were misused and mixed with company assets. The court also banned FTX and Alameda from future trading and registration activities and required them to cooperate with the CFTC in ongoing investigations. 

The ruling followed earlier legal actions against executives Caroline Ellison, Gary Wang, and Nishad Singh. While the CFTC agreed not to seek additional penalties if FTX fulfills its bankruptcy reorganization plan, the case against Bankman-Fried continues. The resolution underscores a broader push for stronger crypto regulation.

Celsius was a crypto lending platform that promised users high returns on their deposits. However, it was accused of misleading customers and mismanaging their funds.

Between 2022 and 2024, Celsius Network (CEL) faced major legal trouble, culminating in a $4.7 billion settlement with the Federal Trade Commission, one of the largest in its history. Celsius, once seen as a leading crypto platform, promised customers high returns and safety for their digital assets. 

However, the company’s CEO, Alexander Mashinsky, was found to have misled users about the platform’s financial health, risks, and the value of its CEL token. Celsius secretly used customer funds to buy CEL tokens and inflate their price, allowing Mashinsky to profit while falsely claiming he wasn’t selling his holdings. 

Just before freezing customer withdrawals in June 2022, Mashinsky withdrew millions of dollars for himself. In 2024, he pleaded guilty to fraud charges and was sentenced to 12 years in prison. The case revealed how Celsius’s promises of security and high returns masked risky practices and deception that led to billions in customer losses.

Binance, the world’s largest cryptocurrency exchange, faced a massive $4.3 billion legal settlement with the U.S. Justice Department. 

The case centered on serious violations of U.S. law, including money laundering, operating without a license, and breaching international sanctions. As part of the settlement, Binance’s founder and CEO, Changpeng Zhao (CZ), pleaded guilty, resigned, and agreed to pay a $50 million personal fine. 

Binance itself admitted guilt, accepted a compliance monitor, and was ordered to pay a $1.81 billion criminal fine plus a $2.51 billion forfeiture. 

U.S. authorities, including Attorney General Merrick Garland and Treasury Secretary Janet Yellen, stated that Binance had allowed illicit transactions tied to terrorism, child exploitation, and narcotics across more than 100,000 transactions by failing to implement proper controls. 

The case followed years of investigation and highlighted a broader crackdown on crypto platforms, ignoring U.S. laws. Richard Teng was named the new CEO after Zhao stepped down. This legal blow came shortly after the collapse of rival exchange FTX, marking a turbulent time for the crypto industry.

Genesis, a crypto lender, was hit with lawsuits for offering unregistered securities and misleading investors about the risks of its products.

In 2024, New York Attorney General Letitia James secured a $2 billion settlement with Genesis Global Capital and its affiliates, which had filed for bankruptcy. 

This settlement, the largest against a crypto firm in New York’s history, was approved by a bankruptcy court and established a victims’ fund to compensate investors who were defrauded through the Gemini Earn program. 

From 2021 to 2022, investors, over 29,000 of whom were New Yorkers, put more than $1.1 billion into Gemini Earn, a high-yield crypto investment product offered by Genesis and its partner Gemini Trust Company. 

However, Genesis halted withdrawals in November 2022, leaving investors with over $1 billion in losses. The lawsuit alleged that Genesis, Gemini, and their parent company, Digital Currency Group (DCG), misled investors by hiding financial losses and downplaying risks. 

The scheme included using a $1.1 billion promissory note to conceal losses. While Genesis did not admit wrongdoing under the settlement, it is now banned from operating in New York. The lawsuit continues against Gemini, DCG, and their executives. 

This case is part of broader crypto enforcement efforts by the New York Attorney General, who has recovered over $2.5 billion from crypto firms since 2021.

Ripple Labs was sued by the SEC for allegedly selling XRP as an unregistered security. It began in December 2020, centered on the U.S. Securities and Exchange Commission’s claim that Ripple Labs and its executives raised $1.3 billion through the unregistered sale of XRP tokens, which the SEC argued were securities. 

The SEC alleged Ripple sold these digital assets to fund its business without proper registration, depriving investors of important financial information. The case focused on whether XRP should be classified as a security under U.S. law. 

In 2023, a court ruled that Ripple’s institutional sales of XRP were unregistered securities offerings, but secondary sales (like those on exchanges) did not violate the law. Ripple was ordered to pay a $125 million civil penalty and was barred from future violations. 

However, in May 2025, the SEC settled the case, allowing Ripple to reclaim over $75 million from escrow and lifting the court’s injunction. Commissioner Caroline Crenshaw dissented, arguing that the settlement undermined investor protection, contradicted prior SEC legal positions, and signaled a troubling shift in how the agency handles crypto enforcement.

In the 2023 lawsuit SEC v. Binance, the U.S. Securities and Exchange Commission (SEC) filed 13 charges against Binance Holdings Ltd., its U.S. affiliate BAM Trading Services, and founder Changpeng Zhao. 

The SEC accused them of violating securities laws by operating unregistered exchanges, broker-dealers, and clearing agencies. 

Despite public claims that U.S. users were blocked from Binance.com and that Binance.US was independently run, the SEC alleged that Zhao and Binance secretly allowed high-value U.S. customers to use the main platform and maintained control over Binance.US. 

The complaint also claimed that Binance and its affiliates misled investors about trading controls and allowed manipulative practices like wash trading, inflating volume figures. Additionally, the SEC said billions in customer funds were secretly commingled and funneled to Zhao-controlled entities like Sigma Chain and Merit Peak. 

Binance was further charged with offering unregistered securities, such as its BNB token, BUSD stablecoin, lending products, and staking services. In total, the SEC alleged that Binance earned over $1 billion unlawfully while actively evading U.S. law.