By
Kseniia Klichova
April 23rd, 2024
One of the allegations Solana Labs is facing in the lawsuit is that SOL is centralized crypto that the defendants benefitted from.
Solana Labs is currently facing a lawsuit for violating federal securities laws. An investor, Mark Young, has sued the entire ecosystem, including other key players, for illegally profiting from the blockchain’s native token SOL. Young filed the class-action lawsuit in a federal district court in California. The defendants of the lawsuit include Solana Labs, its Foundation, co-founder Anatoly Yakovenko, Multicoin Capital Management, co-founder Kyle Samani, and FalconX. Young is working with law firms Roche Freedman and Schneider Wallace Cottrell Konecky concerning the case. The attorneys filed the suit on the 1st of July, stating that Young has incurred losses.
Solana, Solana Foundation, Others, Named in Class-Action Lawsuit
According to the lawsuit, Solana Labs and others sold SOL as securities without a security statement. The plaintiff also claims that the defendants promoted these alleged unregistered securities. Young said he bought SOL in September 2021 during the late summer. He complains that the native token meets the Howey Test to determine if an asset is a security. The filing states:
“Purchasers who bought SOL securities have invested money or given valuable services to a common enterprise, Solana. These purchasers have a reasonable expectation of profit based upon the efforts of the promoters, Solana Labs and the Solana Foundation, to build a blockchain network that will rival Bitcoin and Ethereum and become the accepted framework for transactions on the blockchain.”
One of the allegations Solana Labs is facing in the lawsuit is that SOL is centralized crypto that the defendants benefitted from. Young claims the defendants profited to the detriment of retail investors’ capital. He also pointed to the sales of the native token or agreements to sell the token before its public sale.
Furthermore, the lawsuit claims that major crypto venture capital firm Multicoin “offloaded millions of dollars of SOL” onto retail after vigorously promoting SOL despite the Solana blockchain’s tech challenges. The filing added that Multicoin’s offload passed through FalconX OTC desks.
Solana Holds Up the Fort Despite Crypto Dip
The crypto dip has affected many crypto companies and crypto-related service providers. However, it appears Sola is undisturbed with the brouhaha. Magic Eden, the Solana NFT marketplace, recently acquired $130 million in a Series B financing round. Also, the blockchain has crossed $ 2 billion in ATH NFT sales. The crypto project is going about its operations, unswayed by the crypto crash. Last month, the Solana Foundation and Solana Ventures committed $100 million to promote South Korean crypto businesses.
Solana Foundation General Manager Johnny B. Lee said the firm has been working long enough with Korean developers. Hence, it understands the nature of the country’s market.
“Korea is at the forefront of web3 game design and development and we are focused on helping even more builders in Korea bring their ideas to reality,” said he.