Compound accused of selling unregistered securities

A lawsuit has been filed in the U.S. District Court for the Northern District of California against the decentralized autonomous organization behind the lending platform Compound, its co-founder Robert Leshner, and venture investors backing the project, filed a иск alleging the sale of unregistered securities.

Three individuals in the filing in the U.S. District Court for the Northern District of California reported losses of $98 from holding the COMP utility tokens.

The filing requests that the case be certified as a class action.

Compound DAO and its partners allegedly oversaw the sale and distribution of COMP in violation of the Securities Act. The plaintiffs say they made false and misleading statements about the prospects of profit from owning the tokens. Since then the asset’s price has fallen sharply.

One plaintiff purchased the token in January 2022 at a price of $130 for a total of $75. The other two allocated $2 and $3 respectively for this purpose. The latter received an additional $9 worth of COMP as a Coinbase Earn reward. Since then the token has fallen from about $400–$426 to around $39.6, according to CoinGecko.

The plaintiffs urged the court to classify COMP as a security, to order Compound DAO and other defendants to stop selling the utility tokens, compensate damages and cover the plaintiffs’ legal costs.

Earlier, the CFTC filed a lawsuit against Ooki DAO, created in 2021 to govern the DeFi platform bZx, as well as holders of its tokens.

Earlier, in December, the crypto-lending platform Nexo announced a “gradual winding down” of operations in the United States due to regulatory pressure.

Its competitor BlockFi likewise faced similar problems in the past. The company had to pay $100 million in fines to settle the dispute with the SEC and state regulators. The company also stopped providing services to US residents related to BlockFi Interest Accounts (BIA).

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