The Reason Why Solana’s Company And CEO Are Sued By Investors. A lawsuit was filed against the company and CEO of Solana on July 1, 2022 in the US District Court for the Northern District of California, claiming the cryptocurrency solana (SOL) is an unregistered security.
Lead plaintiff Mark Young, a California resident and SOL investor, is suing on behalf of himself and all investors who purchased solana tokens starting March 24, 2020.
The defendants named in the lawsuit are Solana Labs Inc, the Solana Foundation, CEO of Solana Labs, Anatoly Yakovenko, Multicoin Capital Management LLC, Kyle Samani, and Falconx LLC.
“Defendants made substantial 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 investors suffered substantial losses,” the lawsuit states. /2022).
The lawsuit alleges the defendants intentionally made false or misleading statements regarding the total circulating supply of Solana and its decentralized nature. He added that Solana’s blockchain network was vulnerable to “devastating outages” and network congestion.
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The plaintiffs also accused Multicoin Capital Management and Kyle Samani of relentlessly promoting SOL, after buying it for USD 0.40 or around Rp. 5,990 in 2019.
They then offloaded Solana’s millions of dollars on retail investors using OTC trading desks like Falconx to act as brokers in the sale.
The Reason Why Solana’s Company And CEO Are Sued By Investors. Plaintiffs seek compensation for all losses suffered as a result of defendant’s misconduct and solana’s statement is a guarantee and sale of Defendant’s unregistered SOL securities violates applicable law.
Last month, a lawsuit was filed against Binance.us claiming the algorithmic stablecoin terra usd (UST) and cryptocurrency terra (LUNA) are both unlisted securities. In March, Coinbase was sued for allegedly selling 79 unlisted crypto securities, including SOL.
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SEC chairman Gary Gensler has repeatedly said many crypto tokens are unregistered securities. Meanwhile, regulators are still in an ongoing lawsuit with Ripple Labs and its executives over XRP, which the SEC views as an unregistered security.
Previously, Crypto lending company Celsius was sued last week by former investment manager Jason Stone, because the company continues to be depressed amid falling cryptocurrency prices.
The lawsuit in New York state court comes after Celsius, which offers customers an interest in keeping their cryptocurrencies, was forced to halt withdrawals for its users due to a liquidity crunch.
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Celsius was also recently found to have artificially inflated the price of its own digital coins, failed to hedge against risk and engaged in activities that constituted fraud, according to the lawsuit.
Celsius acts like a bank in that it offers customers returns, sometimes as high as nearly 19 percent, if they deposit their crypto with the company.
The company then lends the crypto to others who are willing to pay high interest rates to borrow. Then he tries to pocket the money to give the proceeds back to the customer.
Stone founded a company called KeyFi that specializes in crypto trading strategies.
Celsius and KeyFi struck a “handshake deal” in which the latter company would “manage billions of dollars in customer crypto deposits in exchange for a share of the profits made from those crypto deposits,” the lawsuit alleges.
“There was no formal written agreement between the parties,” the lawsuit said.
From August 2020, Celsius began “transferring hundreds of millions of dollars in crypto assets” to Stone and his team, according to the lawsuit. Celsius set up a wallet on the Ethereum blockchain which is referred to as “0xb1.” That’s where the company shipped the assets Stone would use, the lawsuit claims.
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Celsius and Stone decided to engage in a crypto trading strategy that requires an effective hedging strategy to manage risk and guard against fluctuations in the price of certain digital coins.
He added Celsius has a full view of what trading activity KeyFi is doing.
Stone claimed Celsius executives “repeatedly assured” that the company had entered into the necessary hedging transactions to ensure that fluctuations in the price of certain crypto assets would not have a material and negative impact on the company or its ability to pay depositors. Stone and his team rely on this representation.
The Reason Why Solana’s Company And CEO Are Sued By Investors. “But those promises are lies. Despite repeated warranties, Celsius failed to implement a basic risk management strategy to protect against the risk of price fluctuations inherent in many of the investment strategies it employs,” the lawsuit claims.
Stone alleged there were “several incidents” in which Celsius’ “failure to perform basic accounting” put customer funds at risk.
Other allegations revolve around a digital Celsius coin called the CEL Coin. It is the Celsius token itself. Celsius says if users receive their interest payments in CEL, they can earn higher interest than those who don’t.
