A legal battle is brewing in Miami, Florida, as two California investors have filed a federal lawsuit against Crypto.com, alleging the company masked a nationwide sports betting operation as financial trading.
The proposed class action lawsuit, filed in the U.S. District Court for the Southern District of Florida, targets North American Derivatives Exchange Inc. and Foris DAX Inc., both operating as Crypto.com. The plaintiffs claim users across the country have collectively lost hundreds of millions of dollars through the platform’s “Sports Event Trading” feature.
Kamana Keohohou and Nicholas Evans, the plaintiffs, argue that Crypto.com’s offering isn’t sophisticated financial trading, but rather a simple sports gamble cleverly disguised as a regulated derivatives product. They believe the company intentionally misled users about the nature of their activity.
Launched in December 2024, the “Sports Event Trading” feature allowed users to purchase “event contracts” tied to sporting outcomes. Crypto.com actively promoted this as a “CFTC-regulated derivatives product,” promising profits for correct predictions, according to the lawsuit.
The mechanics of these contracts, however, closely resemble traditional sports betting. Users essentially answer “yes” or “no” questions about game results, receiving a predetermined payout for correct answers and losing their initial investment with incorrect ones.
Adding to the plaintiffs’ argument, Crypto.com’s own educational materials appear to acknowledge the betting nature of the feature. A glossary for new users states that buying a contract is “essentially placing a bet on your prediction.”
The core of the legal challenge rests on the principle that sports betting is primarily governed by individual state laws, irrespective of any federal derivatives regulations. The lawsuit asserts that Crypto.com’s platform violates laws in over two dozen states, including California and Florida.
Florida law explicitly invalidates gambling contracts unless specifically authorized, and the plaintiffs contend that Crypto.com’s “event contracts” do not qualify for any existing exemptions. California law similarly prohibits bookmaking and wagering on contests of skill.
The lawsuit also highlights a January 2025 review initiated by the Commodity Futures Trading Commission (CFTC) regarding two of Crypto.com’s self-certified event contracts. The CFTC requested a 90-day trading pause, but Crypto.com reportedly chose to continue offering the contracts nationwide.
This isn’t an isolated incident. Connecticut officials recently ordered Crypto.com, along with Kalshi and Robinhood, to cease offering similar unlicensed sports wagering products. A Nevada court also addressed related event contracts, though its decision leaned heavily on arguments presented in a tribal amicus brief.
Keohohou claims to have lost at least $1,200, while Evans reports losses exceeding $800. Both plaintiffs state they would not have participated in the “Sports Event Trading” feature had they known it was potentially illegal in their home state of California.
The lawsuit seeks to represent a nationwide class of U.S. users who lost money on the contracts, as well as a specific subclass of California residents. The plaintiffs are requesting a jury trial to determine the legality of Crypto.com’s practices and seek compensation for their losses.
