Investor files lawsuit accusing Solana Labs of selling unregistered securities
An investor in the SOL token has filed a class-action lawsuit against Solana Labs and other key parties within the Solana ecosystem. The lawsuit claims that Solana’s native token SOL is an unregistered security.
The lawsuit in question was filed on July 1 in a federal California court. This lawsuit comes amid increased concerns from the US Securities and Exchange Commission (SEC) that most cryptocurrencies in the market are securities.
Solana involved in a class-action lawsuit
The lawsuit was filed by Roche Freedman LLP and Schneider Wallace Cottrell Konecky. The law firm filed this lawsuit against Mark Young, a resident of California who invested in the SOL token. Young bought SOL tokens in March 2020, during the early days of the Solana ecosystem.
According to the plaintiff, Solana Labs, its co-founder Anatoly Yakovenko, the Solana Foundation, trading platform FalconX, Multicoin Capital Management venture capital firm, and its CEO if illegally profiting from selling SOL, which is an unregistered security.
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In this case, the lawsuit says that the defendants made massive profits from selling Solana securities to retail investors based in the US. Moreover, it claims that SOL tokens were sold in violation of the securities laws at both the state and the federal level.
Young further said that investors made losses after buying SOL tokens. The investor bought these tokens between August and September last year when the price of the token was making tremendous gains.
Young further said that Yakovenko made false claims about the circulating supply of the token, which made investors make decisions without all the accurate details about Solana.
Lawsuit could harm Solana
This lawsuit is similar to the one filed by the SEC against Ripple Labs and its executives last year regarding the status of XRP as a security. The lawsuit led to XRP being delisted on many exchanges. Solana is listed on all top exchanges including Binance and Coinbase, and if this lawsuit classifies SOL as a security, delisting could harm its prices greatly.
SOL prices have already taken a major blow because of the recession across the market. The token is currently 85% below its all-time high in November last year. The price of SOL was also affected by the issues facing the Solana network. The Solana blockchain has been shut down several times, lowering investor confidence in the token.
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