Major Figures in Solana ecosystem Accused Of Theft
SOL investor Accuses Solana Labs For Violating Securities Law
The lawsuit claimed that Solana’s SOL token is an unregistered securities from which insiders have benefited while retail has suffered.
Key members of the Solana ecosystem are accused in a class action lawsuit filed last week in federal court in California of illegally benefitting off SOL, the blockchain’s native token, which the lawsuit claims is an unregistered securities.
The Solana Foundation, Solana Labs, and [Anatoly] Yakovenko’s administration and development of the Solana blockchain, together, are described as the “cornerstone of the value of SOL stocks” in the lawsuit. In their analysis, SOL was characterized as a highly centralized cryptocurrency that favored its insiders at the expense of regular traders.
Solana Labs, the Solana Foundation, Anatoly Yakovenko of Solana, multibillion-dollar cryptocurrency venture Multicoin Capital, Kyle Samani of Multicoin, and trading desk FalconX are named in the lawsuit brought by California citizen Mark Young, who claims to have purchased SOL in late summer 2021.
A representative for Solana declined to comment. A request for feedback from Multicoin and FalconX did not receive a prompt response.
Young claims in the lawsuit that the creation and sale of SOL satisfied all three criteria set out in the Howey Test, a U.S. Supreme Court decision frequently used as a yardstick to determine whether a transaction constitutes the sale of a security or not.
“Buyers of SOL securities have contributed capital or valued services to a joint venture, Solana.
Regarding the three forks of the Howey Test, the filing stated that these buyers have a reasonable expectation of profit based on the promoters’ efforts, Solana Labs and the Solana Foundation, to develop a blockchain network that will compete with Bitcoin and Ethereum and end up as the standard framework for blockchain transactions.
Young mentioned a number of SOL token sales or agreements to sell SOL tokens in the filing that occurred before the token’s initial public offering.
According to a Form D that Solana Labs submitted to the Securities and Exchange Commission (SEC), the business sold “the future rights” to over 80 million SOL and noted that the deal was exempt from SEC registration.
The lawsuit claimed that Multicoin, a significant cryptocurrency venture capital firm that has made significant investments in the Solana ecosystem, “offloaded millions of SOL” onto retail after “relentlessly” promoting the token despite the Solana blockchain’s technical difficulties.
According to the lawsuit, this claimed unloading went through FalconX OTC desks.