SOL investors accuse the project’s creators of insider trading

What’s new? US investors in the native token of the Solana (SOL) blockchain have filed a class action lawsuit against the project’s creators and their partners. It includes Solana Labs, a developer company, the Solana Foundation, a management fund, Solana co-founder Anatoly Yakovenko, Multicoin Capital, a fund, and crypto platform FalconX. The plaintiffs have filed charges of illegally profiting from the SOL token, in particular insider trading, that harmed retail traders. The asset is also alleged to be an unregistered security.

A lawsuit against Solana Labs

Details of the case. One of the prosecutors, Mark Young, claimed that the way SOL was created and sold meets all three criteria of the Howey Test, which demonstrates whether an asset is a security. A token can be considered as such if the fact of investing in a joint venture with the expectation of making a profit has been confirmed.

Young explained that the investors who bought SOL securities invested money in a common enterprise, Solana, expecting to profit from Solana Labs and the Solana Foundation’s efforts to create a blockchain that will compete with Bitcoin and Ethereum and become generally accepted for transactions in a distributed ledger. He added that such statements took place as part of the project’s promotion.

Young also noted that there had been recorded several sales of the SOL token even before its public offering.

As of July 7, 09:30 UTC, SOL is trading at $37,1, having gained 1,9% per day, according to the Binance exchange.

What happened before? 2000 retail investors in Terra filed a lawsuit against the US arm of Binance after the collapse of the project. The platform is accused of using misleading advertising and selling LUNA tokens as unregistered securities. The suit also alleges that Binance.US was not registered as a broker-dealer or an exchange.

In May, Coinbase customers from the US filed a class action lawsuit against the cryptocurrency exchange for posting a fake GYEN stablecoin. According to the lawsuit, the coin’s price dropped by 80% a day after trading began, causing investors to suffer losses of millions of dollars.