When Florida residents or companies hire a law firm, they may have thousands or millions of dollars at stake on the legal advice that they receive. In one case, a firm is facing claims of legal malpractice from a company that accuses it of providing erroneous and inaccurate legal services in reference to the company’s plans to start and operate a cryptocurrency management fund. Digital Capital Management says that its fund is intended to invest in cryptocurrencies like Bitcoin and ethereum as well as a broader group of blockchain systems, which use secure technology to track transactions.
According to the company, the law firm provided an inaccurate legal analysis and associated advice to its predecessor partnership. It says that it was given incorrect information about its obligations to the Securities and Exchange Commission (SEC). The company said that the partnership then faced an enforcement action from the SEC in 2018 as a result. In addition, the partnership’s founder also faced an SEC action against him. The SEC said that after raising over $3 million for its cryptocurrency fund, the partnership failed to register as an investment company despite meeting the SEC’s definition.
However, the company says that the law firm gave it advice that cryptocurrencies and related assets were not securities and that they should structure their business in accordance with that understanding. The Investment Advisers Act of 1940 applies to securities investment advice.
While the company agreed to pay a civil penalty without admitting wrongdoing, it says that it lost $200,000 in fines as a result of the legal advice it received. Businesses that have lost out due to poor advice from a lawyer may consult with an attorney about the potential to file a legal malpractice lawsuit.