US class-action filed against Solana

A California investor, Mark Yang, has accused key players in the Solana ecosystem of unlawfully profiting from the native token SOL. According to the complaint, the token is an unregistered security.

“The cornerstone of SOL’s value is the sum of efforts by Solana Labs, Solana Foundation and Anatoly Yakovenko in the governance and implementation of the Solana blockchain. They created the network and all tokens in circulation, and determined who would receive SOL securities and on what terms,” the plaintiff said.

He described the asset as a highly centralised cryptocurrency that profits insiders at the expense of retail traders. Among the beneficiaries, the investor also named venture firm Multicoin Capital, its partner Kyle Samani and OTC division FalconX.

Yang said he bought the tokens in late summer 2021. Since then, the asset has fallen significantly in price.

According to the investor, the method of creating and selling SOL conforms to the Howey test principles, under which an asset is determined to be a security.

“The buyers who purchased SOL securities contributed funds or provided services to the common enterprise of Solana. These investors have a reasonable expectation of profit based on the efforts of the promoters — Solana Labs and Solana Foundation — in creating the blockchain network,” the statement said.

The investor pointed to several pre-sales of the asset before the public token sale. According to him, Multicoin, which invested substantial funds in Solana, brought SOL to the retail market “for millions of dollars,” earning a “substantial profit.” However, the firm “tirelessly” promoted the token despite technical problems of the blockchain, the plaintiff contends.

The alleged large-scale sales by Multicoin were carried out through the FalconX platform, Yang alleges.

He seeks a declaration that SOL is a security, compensation by the defendants for losses suffered by him and other investors in the asset, and “reasonable” reimbursement of court costs.

Yang’s interests are represented by the law firm Roche Freedman.

Earlier in June, the same firm filed a class-action on behalf of investors LUNA and TerraUSD (UST) against Binance.US and CEO Brian Shreder.

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