Key members of the Solana ecosystem are the targets of a class action lawsuit filed last week in a California court. They are accused of illegally profiting from SOL, the blockchain’s native token, which the lawsuit says is an unregistered security.
The lawsuit alleges,
“The cornerstone of the value of SOL securities is the sum of Solana Labs, Solana Foundation and [Anatoly] Yakovenko’s management and implementation of the Solana blockchain.
The aforementioned lawsuit characterized SOL as a highly centralized cryptocurrency, which favors its insiders over regular traders.
So what is it?
By violating federal securities laws, Solana Labs, its foundation, co-founder Anatoly Yakovenko, Multicoin Capital Management, Kyle Samani and FalconX, according to California resident Mark Young, are all responsible.
The California District Court received the class action filing. It asserts that the defendants advertised the allegedly unregistered securities and offered SOLs as securities without filing a registration statement.
Similar allegations of securities violations have been made against many other cryptocurrency startups over the years. In this particular case, the plaintiff claims that he has suffered losses and is obligated to take legal action as a result.
According to the petition, SOL is a centralized cryptocurrency that the defendants profited from at the expense of individual investors’ capital. None of the defendants has yet responded to the trial with a statement.
According to the lawsuit, the altcoin meets the Howey test requirements and is considered a security.
In fact, Young also referred to several SOL token sales or SOL token sale agreements in the filing, long before the token’s initial public offering. According to a Form D Solana Labs submitted to the SEC, the company sold “future rights” for more than SOL80 million and noted that the deal was exempt from SEC registration.
A fight in the charts
The recent stock market crash has hurt many cryptocurrency projects and businesses, but Solana doesn’t seem to be as affected as its competitors. A group of Series B investors just invested $130 million in Magic Eden, a Solana-based NFT marketplace. Additionally, NFT sales just hit an all-time high of $2 billion on the blockchain.
The Solana Foundation and Solana Ventures have also created a $100 million fund to support Web3 startups in South Korea. The ecology seems to thrive on the basis of these developments, but only time will tell if it can live up to expectations.