A class-action lawsuit has been filed claiming that the cryptocurrency solana (SOL) is an unregistered security under the Howe Test. “The specific facts and circumstances relating to SOL securities support the conclusion that SOL is a security under Howey trial,” argued the plaintiffs.
Solana is a security, lawsuit claims
A lawsuit, filed July 1 in the US District Court for the Northern District of California, claims that the cryptocurrency solana (SOL) is an unregistered security. Lead plaintiff Mark Young, California resident and SOL investor, is suing on behalf of himself and all investors who have purchased the Solana token since March 24, 2020.
The defendants named in the lawsuit are Solana Labs Inc., the Solana Foundation, Solana Labs CEO Anatoly Yakovenko, Multicoin Capital Management LLC, Kyle Samani, and Falconx LLC. The lawsuit says:
The defendants made substantial 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 caused substantial losses to investors.
The lawsuit alleges that the defendants knowingly made false or misleading statements about Solana’s total circulating supply and its decentralized nature. It added that Solana’s blockchain network has been plagued by “catastrophic outages” and network congestion.
The plaintiffs allege that Multicoin Capital Management and Kyle Samani “relentlessly promoted SOL securities after buying it in 2019 for $0.40.” He later “loaded millions of dollars of SOL securities on retail investors” using OTC trading desks such as Falconx to act as a broker for sales, he further elaborated.
SOL is currently the ninth largest cryptocurrency by market capitalization. At the time of writing, Solana is trading at $36.83, down 7% over the past 30 days. Based on data from Bitcoin.com Markets, SOL reached an all-time high of $260.07 in November last year.
Noting that on April 3, 2019, the US Securities and Exchange Commission (SEC) published a “Framework for the ‘Investment Contract’ Analysis of Digital Assets,” the lawsuit claims:
The specific facts and circumstances relating to SOL securities support the conclusion that SOL is a security under Howey trial.
Plaintiff is seeking compensation for all damages resulting from the defendant’s wrongdoing and a declaration that Solana is a security and that the defendant’s unregistered sale of SOL securities violated applicable laws.
Last month, a lawsuit was filed against Binance.us claiming that both the algorithmic stablecoin Terasd (UST) and the cryptocurrency Terra (LUNA) are unregistered securities. In March, Coinbase was sued for selling 79 unregistered crypto securities, including SOL.
SEC Chairman Gary Gensler has repeatedly stated 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 views as an unregistered security.
What do you think about this lawsuit alleging that Solana is a security? Let us know in the comments section below.
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