SOL Investors Sue Solana Labs and Multicoin Capital for Violating US Securities Law

SOL Investors Sue Solana Labs and Multicoin Capital for Violating US Securities Law

SOL Investors Sue Solana Labs and Multicoin Capital for Violating US Securities Law

A Solana investor has launched a class-action complaint against key players in the Solana ecosystem, accusing them of making false promises and profiteering from the sale of unregistered securities to retail clients. Mark Young, the plaintiff, filed the complaint on July 1st against Solana Labs, Solana Foundation, Solana CEO Anatoly Yakovenko, cryptocurrency investment firm Multicoin Capital and its co-founder Kyle Samani, and trading platform FalconX. Young is working on the lawsuit alongside the legal firms Roche Freedman and Schneider Wallace Cottrell Konecky.

Solana Labs and others, according to the lawsuit, offered SOL as securities without providing a security statement. In addition, the plaintiff argues that the defendants marketed the purported unregistered securities. Young stated that he purchased SOL in September 2021 and that the native token passes the Howey Test, which determines whether an asset is a security.

According to the filing, "Buyers of SOL shares have contributed money or valued services to a shared venture, Solana. These buyers have a legitimate expectation of profit based on the promoters' efforts to develop a blockchain network that will compete with Bitcoin and Ethereum and become the preferred framework for blockchain transactions."

One of the claims made against Solana Labs in the complaint is that SOL is a centralized cryptocurrency from which the defendants benefited. Young alleges that the defendants benefitted at the expense of ordinary investors' cash. He also mentioned native token sales or agreements to sell the token before its public sale.

According to court filings, Young claims the defendants spent extravagant sums to promote SOL in the United States since April 2020, allegedly raising its price to $258 (approximately Rs. 20,420) per token and market value to $77 billion (about Rs. 6,09,413 crore) as of 5 November 2021.

"Through these promotional activities, SOL securities were elevated from a relatively unknown crypto-asset to one of the world's top crypto-assets," Young said.

"Samani and Multicoin continuously sold SOL stocks, inflating its market price from less than a dollar to hundreds of dollars, maintaining in their promotional activities even after it was evident that Solana was experiencing major outages and technical concerns," he continued.

It is worth mentioning that the bitcoin market and the leading tech stocks internationally have been experiencing a volatile investing season in recent weeks. Several issues have contributed to the carnage that several crypto currencies, including SOL, are currently facing.

Furthermore, unlike many other crypto tokens in the industry, SOL generated massive returns for the majority of its investors last year. As many may recall, SOL was one of the space's fastest-growing tokens, reaching an all-time high of over $260 (around Rs. 20,420) in November 2021. It also received funding from Sam Bankman-Fried, the co-founder and CEO of major crypto exchange FTX and one of the wealthiest individuals in crypto.

Bitcoin is an uncontrolled digital money that is not legal tender and is vulnerable to market hazards. The information in this article is not meant to be, and does not represent, financial advice, trading advice, or any other type of advice or suggestion supplied or supported by NDTV. NDTV shall not be liable for any loss incurred as a result of any investment made based on any apparent suggestion, forecast, or other information provided in the article.

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