Two investors from California have filed a federal class action lawsuit against Crypto.com in Miami, Florida, alleging that the company has been running an illegal sports betting operation disguised as financial trading. The lawsuit targets both North American Derivatives Exchange Inc., operating as Crypto.com, and Foris DAX Inc. According to the plaintiffs, Kamana Keohohou from Palm Springs and Nicholas Evans from Benicia, users across the United States have collectively lost hundreds of millions of dollars on the platform’s sports event contracts.
The legal action, submitted to the U.S. District Court for the Southern District of Florida, emphasizes that Crypto.com’s “Sports Event Trading” feature is effectively a gambling product, cleverly marketed as a regulated derivatives instrument. This feature was launched in December 2024 and allows users to buy “event contracts” based on potential outcomes of sports events, promoting itself as a “CFTC-regulated derivatives product.” The platform encourages users to “turn correct predictions into profit” with this trading feature available nationwide.
The plaintiffs argue that the mechanics of this trading function closely resemble traditional sports betting. Users engage by answering “yes” or “no” to queries related to game outcomes, with correct answers leading to payouts while incorrect ones result in losses equal to the contract price. The legal representatives highlight that Crypto.com’s own educational content suggests these transactions resemble betting, stating, “[w]hen you buy a contract on Predict, you’re essentially placing a bet on your prediction about the occurrence…”
Central to the lawsuit is the assertion that sports betting is primarily regulated by state laws, overriding any federal derivatives framework. The plaintiffs contend that Crypto.com’s operations violate laws in over two dozen states, including California, where they reside, and Florida, cited by Crypto.com as the governing jurisdiction for legal disputes. Florida’s legal framework categorically voids gambling contracts that lack specific authorization, with the complaint indicating that the event contracts in question do not meet any established legal categories in the state.
In California, the lawsuit refers to existing prohibitions on bookmaking and wagering on skill contests. Furthermore, it references a 2025 opinion from the California Attorney General declaring daily fantasy sports games as unlawful sports wagering under state regulations.
Regulatory scrutiny surrounding Crypto.com has intensified following the launch of these contracts. In January 2025, the Commodity Futures Trading Commission announced a review of two self-certified event contracts, requesting the company to halt trading during a 90-day evaluation. The lawsuit claims that despite these regulatory inquiries, Crypto.com continued to offer these contracts across the country.
Other states have similarly acted to limit Crypto.com’s offerings. For example, officials in Connecticut instructed Crypto.com, alongside Kalshi and Robinhood, to cease providing what was identified as unlicensed sports wagering products. In Nevada, a federal judge recently opted not to obstruct certain event contracts, although the decision garnered attention for its reliance on external arguments rather than a direct examination of derivatives laws.
Keohohou states that he incurred losses of at least $1,200 utilizing the platform, while Evans reported losses exceeding $800. Both plaintiffs claim they would have refrained from participation had they been aware of the purported illegality of the platform’s offerings in California.
The lawsuit is seeking certification for a nationwide class of U.S. users who have lost money on these contracts, as well as a subclass specific to California. The plaintiffs are pursuing a jury trial, aiming to hold Crypto.com accountable for its alleged violations.
