A Solana investor has filed a class-action lawsuit against key parties in the Solana ecosystem for allegedly making misleading statements and profiting from selling unregistered securities to retail customers. The plaintiff, Mark Young, filed the suit on 1 July against Solana Labs, Solana Foundation, Solana CEO Anatoly Yakovenko, crypto investment firm Multicoin Capital and its co-founder Kyle Samani, as well as trading platform FalconX. Young is working with law firms Roche Freedman and Schneider Wallace Cottrell Konecky concerning the case.
According to the lawsuit, Solana Labs and others sold SOL as securities without a security statement. The plaintiff also claims that the defendants promoted these alleged unregistered securities. Young said he bought SOL in September 2021 while adding that the native token meets the Howey Test to determine if an asset is a security.
The filing states, “Purchasers who bought SOL securities have invested money or given valuable services to a common enterprise, Solana. These purchasers have a reasonable expectation of profit based upon the efforts of the promoters, Solana Labs and the Solana Foundation, to build a blockchain network that will rival Bitcoin and Ethereum and become the accepted framework for transactions on the blockchain.”
One of the allegations Solana Labs is facing in the lawsuit is that SOL is centralised crypto that the defendants benefitted from. Young claims the defendants profited to the detriment of retail investors’ capital. He also pointed to the sales of the native token or agreements to sell the token before its public sale.
Court documents show Young has alleged the defendants spent exorbitant sums to promote SOL in the US since April 2020, which supposedly boosted its price to $258 (roughly Rs. 20,420) per token and market value to $77 billion (roughly Rs. 6,09,413 crore) as of 5 November 2021.
“These promotional efforts took SOL securities from a relatively obscure crypto-asset to one of the top crypto-assets in the world,” Young wrote.
“Samani and Multicoin continuously flogged SOL securities, inflating its market price from below a dollar to hundreds of dollars, persisting in their promotional efforts even after it was clear that Solana had serious outages and technical issues,” he added.
It is worth noting that the cryptocurrency market and the top tech stocks globally have been on a tumultuous season in the investment area for the past few weeks. Several problems have caused the bloodbath that many crypto tokens are experiencing today, including SOL.
Moreover, above many crypto tokens in the space, SOL created huge profits for most of its investors last year. As many may remember, SOL was one of the fastest-growing tokens in the space, which even recorded an all-time high of around $260 (roughly Rs. 20,420) in November 2021. It also attracted investment from one of the richest men in crypto, Sam Bankman-Fried — the co-founder and CEO of major crypto exchange FTX.
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