The plaintiff, Mark young, has filed a class-action lawsuit on behalf of Solana investors against the Solana Foundation, Solana CEO, Anatoly Yakovenko, crypto investment firm Multicoin Capital and its co-founder Kyle Samani as well as a trading platform in the Northern District of California, is represented by law firms Roche Freedman and Schneider Wallace.
The lawsuit filed was on July 1st and was a result of Solana labs allegedly making misleading statements and profiting from trading unregistered securities to retailed customers.
The plaintiff said the defendants made confusing statements concerning the supply of SOL and its decentralized nature and said company insiders got a substantial percentage of tokens.
According to Mark, “As of May 2021, insiders held 48% of the SOL supply. The network is thus highly centralized,”
According to Young Mark;
“Defendants made enormous 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 the investors have suffered enormous losses,”
The lawsuit was filed on behalf of the investors who purchased Solana tokens between March 24th, 2020, and the filing data as said earlier.
As revealed by the court documents shown, it was revealed that Mark Young has alleged the Solana labs to have spent a large amount to promote SOL in the US since April 2020, which aided the price of the SOL to $258 per token and the Market value to $77 billion as of the 5th November 2021.
“These promotional efforts took SOL securities from a relatively obscure crypto-asset to one of the top crypto-assets in the world,” said the Young.
“Samani and Multicoin continuously flogged SOL securities, inflating its market price from below a dollar to hundreds of dollars, persisting in their promotional efforts even after it was clear that Solana had serious outages and technical issues,” he added, referring to multiple snafus over the past year, including an outage lasting over 10 hours in Sept 2021.
Young alleged Solana CEO, Yakovenko, to have sold the SOL securities at low prices to raise private funding. For instance, ” Solana sold “the future rights” to nearly 80 million SOL tokens for $3.17 million ($0.04 per token) in April 2018, the filing claims. It adds that the defendants chose to sell only a small amount of its token supply (less than 2%) in its 2020 Initial Coin Offering, which priced SOL tokens at $0.22 as stated by CryptoRank.
Young Mark, the plaintiff added; “Defendants did this to ensure they had de facto control over the Solana blockchain and to artificially drive down the available supply of SOL securities through coordination amongst themselves”.
He added that Multicoin profited from delivering millions of SOL tokens to the retail investors via using the over-the-counter (OTC) trading desks like falconX stood in as a broker.