Why Cryptocurrency EOS Soared 19% While the Market Took a Breather Today

What happened

On an otherwise down day in the cryptocurrency market, EOS (EOS 12.88%) is one token that’s absolutely rocketing higher. As of 12:30 p.m. ET, EOS has soared 19% over the past 24 hours.

The move follows an interesting court ruling this week in which a judge from the Southern District of New York threw out a settlement between Block.one (the company that initially designed the EOS network) and investors. This $27.5 million settlement, which was proposed by Block.one and agreed to in June of this year, stemmed from a dispute with investors over whether an initial coin offering back in 2018 constituted an unregistered securities offering.

Other crypto projects have been mired in scrutiny from regulators and investors over alleged unregistered securities offerings, but this settlement was one of the more substantial the crypto community had seen. In addition, it’s important to note that Block.one also previously settled with the U.S. Securities and Exchange Commission for $24 million over the same allegations.

So what

While the company sought to settle these claims to focus on moving its blockchain endeavors forward, it’s clear that investors are paying close attention to what this ruling could mean for various projects embattled with legal issues. The fact that EOS is surging following this news indicates investors are taking the cue that the downside pressure from this headwind could be over. 

Now, EOS isn’t the only token that’s been caught up in allegations of unregistered securities offerings. Other projects, including XRP, are fighting similar battles. That said, the rather massive $4 billion raise Block.one managed to pull off in 2018, then the largest ever, made a settlement more likely. The ability for other projects to settle, given limited liquidity, remains uncertain.

Now what

The reason for this settlement being thrown out — that the party representing investors didn’t “adequately represent the interests of all investors” — is interesting. From here, it will be interesting to see how this decision impacts ongoing litigation with other projects. Investors are clearly watching these cases closely, and EOS is one token that could represent the upside following potentially positive future rulings for other embattled crypto projects.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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