FinTech, Blockchain, and Cryptocurrency

Cornerstone Research has consulted to clients and supported leading market microstructure experts on a wide range of issues pertaining to:

• Reported volume integrity and market quality on major cryptocurrency exchanges
• Token price discovery across cryptocurrency exchanges
• Price impacts of large cryptocurrency orders
• Wash trading allegations on specific cryptocurrency exchanges
• Auction mechanisms
• Assessment of the impact of stable coins on cryptocurrency markets

In regulatory investigations and private litigation arising from the initial distribution of cryptotokens, clients have retained Cornerstone Research to evaluate drivers of a token’s value through an economic lens. This includes assessment of fungible and non-fungible tokens (NFTs) as well as stable coins. Our analyses have helped address issues within the context of the Howey Test, which lays out the general approach to determining whether an asset should be considered a security.

We leverage significant experience in complex securities cases and valuation assignments and apply it to cryptocurrency-specific issues. Cornerstone Research has conducted damages analyses in matters relating to cryptocurrency trading and token valuation. Our assignments have included:

• Evaluating rescission damages claims for heavily traded cryptocurrencies
• Valuing companies whose primary assets are illiquid cryptotokens
• Analyzing damages claims through a comparison of the economic value associated with cryptocurrency trading strategies

Cornerstone Research assists clients in analyzing blockchain transactions, voting delegation, and proof of work or proof of stake designs. We have evaluated:

• Underlying blockchain code for scalability and operability
• Genesis block allocations and traced movements in cryptotokens for the purpose of assessing damage claims. This includes syncing nodes and using APIs (application programming interfaces) as part of the data processing and analysis.

As technology has begun to change the way consumers interact with financial products, new types of disputes have emerged. Our experience with traditional consumer financial products provides a solid foundation to assist clients with regulatory and litigation matters arising from new technology. For example, we have evaluated how existing consumer finance regulation applies to new platforms and how borrowers interact with developing technology for loan products. We have also analyzed financial “robo-advisors” and how automated investment strategies perform relative to alternative portfolios under different risk-return scenarios.

Cornerstone Research has extensive experience with assessing how government regulations apply to cryptocurrency and assisting clients with responses to government entities including the CFTC and SEC. This includes assessing allegations of unregistered securities offerings, estimating alleged harm, and evaluating claims of market manipulation. Our staff and experts have experience presenting analysis directly to regulatory entities.

As digital asset transactions have become more prevalent, the complexity and volume of data stored on blockchains has grown substantially. The ability to extract, analyze, and make sense of these data is critically important for understanding the value transfers associated with market-moving events.

Cornerstone Research has substantial experience collecting and analyzing data across blockchains, centralized cryptocurrency exchanges, and decentralized finance (DeFi) applications.