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Solana Labs Lawsuit: US ban on Crypto holder based policies

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Mark Young, a California resident has alleged  that key figures in the Solana ecosystem misled investors and who sold them unregistered securities. A lawsuit has been filed against Solana Labs by a Solana investor who alleges that key parties made misleading statements in which they profited from  when selling unregistered securities to retail customers. 

Mark Young, the plaintiff, filed the suit on July 1st, 2022, against multiple parties. Among them are:

  • Solana Labs
  • Solana Foundation
  • Solana CEO Anatoly Yakovenko 
  • Multicoin Capital
  • Multicoin Capital co-founder Kyle Samani
  • Crypto Exchange FalconX

“Defendants made enormous profits through the sale of solana (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,” Said Young. 

Filed on behalf of many investors who made their Solana investments between the dates of March 24, 2020 and July 1st 2022, Young said that many misleading comments were made by the defendants about the supply and decentralization of SOL, claiming that the company executives held a substantial percentage of tokens. 

“As of May 2021, insiders held 48% of the SOL supply. The network is thus highly centralized,” Young claimed.

So far, Multicoin Capital, Solana Labs, and FalconX have not provided any word as to their stance on the suit, while Yakovenko and Samani remain unreachable according to other news networks like Blockworks. 

Court documents have indicated that Young claims the defendants invested a lot of money in the promotion of Solana’s native coin, SOL, beginning in the April of 2020 in the US market. He claims this resulted in the $260 token evaluation that followed in November of 2021, and the market value of $77 billion. 

“These promotional efforts took SOL securities from a relatively obscure crypto-asset to one of the top crypto-assets in the world,” Young wrote.

“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.

He also questioned the decentralization of the Solana platform, whose insiders held 48% of the SOL supply. “The network is thus highly centralized,” Young claimed.

“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,” the plaintiff wrote.

Another allegation by Young suggests that Yakovenko increased private funding through the selling of SOL securities at low prices, selling “the future rights” to around 80 million SOL tokens for $3.17 million in April 2019. 

At the time of writing SOL is valued at $38.54 14% of its $260 high in November of 2021. This may be due to the bearish momentum that has encapsulated the crypto market since May, 2022. 

The law firms representing the plaintiff’s case are Roche Freedman and Shneider Wallace. Roche Freedman has filed numerous cryptocurrency lawsuits in the last year, including Binance US, KuCoin for the execution of illegal trades and securities violations in relation to EOS, TRX, and UST. The firm also secured $100 million in the lawsuit against Craig Wright, creator of Bitcoin. 

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