Dfinity Wins Summary Judgment in Purported Securities Class Action

On February 10, 2025, the Superior Court of California, County of San Mateo, granted summary judgment in favor of Cravath client Dfinity Foundation (“Dfinity), a Swiss not‑for‑profit entity working to create a smart contract platform designed to power blockchain versions of popular internet applications, in purported class action securities litigation.

The litigation revolved around Dfinity’s Internet Computer Project (“ICP”) master governance tokens, and raised, among other key issues in the cryptocurrency space, whether plaintiffs who purchase digital assets on a trading platform like Coinbase can maintain a Securities Act claim where they purchased from anonymous trading counterparties and cannot prove that they purchased from the issuer. It also addressed the related question of whether, where plaintiffs purchase digital assets from a market maker retained by the issuer to create liquidity in the market (a common practice in the blockchain space), the market maker serves as the issuer’s agent such that the plaintiffs purchase directly from the issuer. The Court answered “no” to both questions, providing important guidance on who has private right of action for the unregistered sale of alleged securities—and therefore who may seek full recission as a remedy.

In July 2021, Plaintiff Daniel Ocampo filed a purported class action complaint against Dfinity and others, alleging that the defendants had sold unregistered securities in violation of Sections 5, 12(a)(1) and 15 of the Securities Act of 1933. After four rounds of demurrers (i.e., motions to dismiss), only the Section 12(a)(1) claim remained against Dfinity. Plaintiff moved for class certification, which Dfinity opposed and then moved for summary judgment. Dfinity opposed Plaintiff’s class certification motion on the same ground on which Dfinity moved for summary judgment (among others): Plaintiff could not establish that Dfinity had (1) passed title to the alleged securities directly to him; or (2) directly and actively solicited his purchase of the alleged securities. Therefore, he could not establish that Dfinity was a “statutory seller”, which a plaintiff must do in order to have standing to sue under Section 12(a)(1). In December 2024, the Court denied Plaintiff’s motion for class certification without prejudice.

In subsequently granting Dfinity’s motion for summary judgment, the Court held that Dfinity “met its burden to show that Plaintiff cannot establish that Dfinity was a statutory seller, a necessary element of his Section 12(a)(1) claim”. The Court also held that “the record cannot support the conclusion that Dfinity solicited from Plaintiff” the purchase of the alleged securities. Therefore, the only avenue for liability would be if Plaintiff directly purchased securities from Dfinity. However, transaction information that Dfinity had obtained from Coinbase made clear that Dfinity was not a counterparty to any of Plaintiff’s transactions. The Court further held that Plaintiff’s purchases from a market maker called Wintermute did not constitute direct passage of title from Dfinity to Plaintiff because, among other reasons, “Wintermute is not acting as Dfinity’s agent”. Therefore, the Court held that Plaintiff could not establish standing, and that Dfinity was entitled to judgment as a matter of law.

The Cravath team included partners Kevin J. Orsini, who argued the motion, Antony L. Ryan and Lauren M. Rosenberg, and associates Evan D. Siegel and Safeena L. Mecklai.

The case is Ocampo v. Dfinity USA Research LLC, et al., No. 21‑CIV‑03843 (Cal. Super.)