A class action lawsuit was filed alleging that the cryptocurrency Solana (SOL) is an unregistered security under the Howey test.” Plaintiffs argued that “the specific facts and circumstances relating to the SOL securities support the conclusion that SOL is a security under the Howey test.
Lawsuit Alleges Solana is a Security
A lawsuitwas filed on July 1 in the U.S. District Court for the Northern District of California alleging that the cryptocurrency Solana (SOL) is an unregistered security. Lead plaintiff Mark Young, a California resident and SOL investor, is suing on behalf of himself and all investors who have purchased Solana tokens since March 24, 2020.
Defendants named in the lawsuit include Solana Labs Inc, Solana Foundation, Solana Labs CEO Anatoly Yakovenko, Multicoin Capital Management LLC, Kyle Samani, and Falconx LLC. The lawsuit is as follows.
Defendants have profited enormously from the sale of SOL securities to individual investors in the United States in violation of the registration provisions of federal and state securities laws, and investors have suffered enormous losses.
The lawsuit alleges that Defendants intentionally made false or misleading statements regarding the total distribution of Solana and its decentralized nature. It adds that Solana’s blockchain network is prone to “catastrophic outages” and network congestion.
The plaintiffs alleged that Multicoin Capital Management and Kyle Samani “relentlessly promoted SOL securities after purchasing them in 2019 for $0.40.” They then “offloaded millions of dollars of SOL securities to retail investors” using OTC trading desks like Falconx to act as sales brokers, he further elaborated.
SOL is currently the ninth largest cryptocurrency by market capitalization. As of this writing, Solana is trading at $36.83, down 7% over the past 30 days.SOL hit an all-time high of $260.07 last November, based on data fromBitcoin.com Markets.
On April 3, 2019, the U.S. Securities and Exchange Commission (SEC) issued a “Framework for Analyzing Digital Asset ‘Investment Contracts'” and filed suit.
The specific facts and circumstances regarding the SOL securities support the conclusion that SOL is a security under the Howey test.
Plaintiff seeks indemnification for all damages suffered as a result of Defendants’ fraudulent conduct and a declaration that Solana is a security and that Defendants’ unregistered sales of SOL securities violate applicable law.
Last month, a lawsuit was filed againstBinance.usalleging that the algorithmic stablecoin Terrausd (UST) and the cryptocurrency Terra (LUNA) are both unregistered securities. in March, Coinbase filed a complaint against 79 accused of allegedly selling unregistered crypto securities.
SEC Chairman Gary Gensler has repeatedly stated that many tokens are unregistered securities. Meanwhile, regulators are still litigating with Ripple Labs and its executives overXRPThe SEC considers XRP an unregistered security.
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