As part of the Howey test, a class action lawsuit has been filed alleging that the cryptocurrency solana (SOL) is an unregistered security. “Certain facts and circumstances regarding SOL securities support the conclusion that SOL is a security under the Howey test,” said plaintiff.
Solana is a Securities, Litigation Claims
A lawsuit filed in the US District Court for the Northern District of California on July 1 alleges 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 purchased the faded tokens effective March 24, 2020.
The defendants named in the lawsuit are Solana Labs Inc., Solana Foundation, Solana Labs CEO Anatoly Yakovenko, Multicoin Capital Management LLC, Kyle Samani, and Falconx LLC. The case says:
The defendants made enormous profits through the sale of SOL securities to retail investors in the United States, in violation of the registration provisions of federal and state securities laws, and the investors suffered huge losses.
The lawsuit alleges that the defendants deliberately made false or misleading statements about solana’s total circulating supply and decentralized nature. He adds that Solana’s blockchain network is prone to “disruptive outages” and network congestion.
Plaintiff alleges that Multicoin Capital Management and Kyle Samani “brutally promoted SOL securities after buying them for $0.40 in 2019.” He then detailed that they “emptied millions of dollars of SOL securities to individual investors,” using OTC trading desks like Falconx to act as a broker for the sale.
SOL is currently the ninth largest cryptocurrency by market cap. At the time of writing, solana is down 7% in the last 30 days to trade at $36.83. SOL hit an all-time high of $260.07 in November last year, according to data from Bitcoin.com Markets.
Noting that on April 3, 2019, the U.S. Securities and Exchange Commission (SEC) published a “Framework for the ‘Investment Contract’ Analysis of Digital Assets,” the lawsuit claims that:
Certain facts and circumstances regarding SOL securities support the conclusion that SOL is a security under the Howey test.
Plaintiff seeks compensation for all damages suffered by the defendants’ misconduct and declaring that solana is a security and defendants’ unregistered sale of SOL securities violates applicable law.
Last month, a lawsuit was filed against Binance.us alleging that the algorithmic stablecoin terrausd (UST) and cryptocurrency terra (LUNA) are both unregistered securities. In March, Coinbase was sued for allegedly selling 79 unregistered crypto securities, including SOL.
SEC Chairman Gary Gensler has repeatedly said that many tokens are unregistered securities. Meanwhile, the regulator is still in an ongoing lawsuit with Ripple Labs and its executives over XRP, which the SEC considers an unregistered security.
What do you think of this lawsuit claiming Solana is a security? Let us know in the comments section below.
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