An action class has been brought against cryptocurrency solana, claiming it is an unregistered security according to the Howey test. “The specific facts and circumstances relating to SOL securities support the conclusion that SOL is a security under the Howey test,” the plaintiff argued.
Solana is an attorney for security and lawsuit claims
On July 1, a lawsuit was filed in the U.S. District Court of the Northern District of California alleging that crypto solana (SOL), is not regulated. Mark Young (a California resident, and SOL investor) is the plaintiff.
Solana Labs Inc. and the Solana Foundation are named as defendants in this lawsuit. Solana Labs CEO Anatoly Yakovenko is Solana Labs CEO. Multicoin Capital Management LLC, Kyle Samani and Falconx LLC are also listed. It states that:
The defendants made huge profits selling SOL securities in the United States to investors, violating the registration provisions in federal and state securities laws. Investors suffered immense losses.
The lawsuit alleges that the defendants deliberately made false or misleading statements regarding solana’s total circulating supply and its decentralized nature. It adds that Solana’s blockchain network is prone to “devastating outages” and network congestion.
The plaintiff alleged that Multicoin Capital Management and Kyle Samani “relentlessly promoted SOL securities, after purchasing them for $0.40 in 2019.” They subsequently “offloaded millions of dollars of SOL securities on retail investors” using OTC trading desks such as Falconx to act as a broker for the sale, he further detailed.
SOL is the 9th-largest cryptocurrency in market capitalization. Solana trades at $36.83 as of the writing. This is 7% less than the previous 30 days. Based on data from Bitcoin.com Markets, SOL reached an all-time record of $260.07 last November.
Noting that on April 3, 2019, the U.S. Securities and Exchange Commission (SEC) published a “Framework for ‘Investment Contract’ Analysis of Digital Assets,” the lawsuit claims:
SOL securities are a security according to the Howey test.
The plaintiff is seeking compensation for all damages sustained as a result of the defendants’ wrongdoing and a declaration that solana is a security and that the defendants’ unregistered sales of SOL securities violated applicable laws.
Binance.us was subject to a lawsuit last month alleging that the algorithmic stablecoin terrausd UST (UST) as well as cryptocurrency terra (LUNA ) were unregistered securities. Coinbase was accused of selling unregistered cryptocurrency securities (including SOL) in March.
Gary Gensler (SEC Chairman) has said repeatedly that many tokens have not been registered securities. XRP (which the SEC regards as unregistered securities) is the subject of an ongoing legal battle between the regulator and Ripple labs.
Do you have any thoughts about the suit claiming solana to be a security? Please comment below.
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