MDL Denied for Crypto Broker Cases; Litigation Stays Fragmented Across Three Districts

COURT BARS MDL BID FOR CRYPTO BROKER CASES

Three federal lawsuits against a crypto brokerage platform will remain scattered across separate districts after a judicial panel rejected an attempt to consolidate them. The ruling leaves plaintiffs and defendants litigating parallel claims in Chicago, Los Angeles, and Philadelphia, with no single judge steering the outcome. The decision signals that courts are still wary of granting broad coordination in crypto disputes, even when similar legal questions appear.

Plaintiff Anthony Motto filed the motion to centralize the cases under the Judicial Panel on Multidistrict Litigation, arguing that the three actions shared common questions about the platform’s handling of customer deposits and withdrawals. The defendants opposed centralization, contending that the individual facts—different account agreements, state laws, and proof of loss—outweighed any efficiencies. Judge Sarah Vance, writing for the panel, agreed, finding the actions too factually distinct to justify the administrative burden of a single proceeding.

The panel’s refusal means each case will proceed on its own timetable. Plaintiffs in Illinois, California, and Pennsylvania can now press their claims without waiting for a transferee judge to set a common schedule, but they lose the leverage that coordinated discovery and unified rulings can create. The brokerage avoids a single, high-profile venue that might attract media attention and amplify settlement pressure.

In practical terms, the decision keeps crypto-related customer litigation fragmented. Plaintiffs must litigate state-by-state, while the platform can tailor defenses to local judges and juries. This outcome also reduces the risk that one unfavorable ruling could bind the company nationwide, lowering systemic legal exposure.

For markets, the ruling underscores that crypto exchanges still operate in a patchwork of jurisdictions rather than under unified federal oversight. Without an MDL, plaintiffs cannot easily pool resources to probe deeper issues such as whether certain tokens qualify as unregistered securities—an inquiry that could draw SEC attention. The absence of coordinated pressure may slow the pace at which customer claims force clearer rules on custody, solvency, or asset segregation.

Exchanges and DeFi protocols should read the decision as a temporary shield: dispersed cases cost more to defend individually, but they also limit headline risk and regulatory spill-over. Traders holding funds on similar platforms face the same fragmented recourse if platforms falter, reminding participants that legal remedies remain slower and less certain than the speed of crypto itself.