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Class action claims SOL tokens were unregistered securities that lost millions

Law firm representing SOL investor is now calling on investors who lost money in SOL to join the class action. – Photo: ShutterStock

A Solana (SOL) investor is accussing Solana’s team and its venture capitalist backer of unlawfully making “enormous profits” through sale of SOL tokens to retail investors in a case filed in California.

The suit claims that sale of SOL securities constituted “the sale of unregistered securities under controlling federal law,” court’s filings show.

The suit, filed by California resident Mark Young, names Solana Labs, the Solana Foundation, Solana’s founder Anatoly Yakovenko, venture capital firm Multicoin Capital, Multicoin’s Kyle Samani and trading platform FalconX.

SOL first traded in 2020

SOL tokens first started trading in March 2020 on exchanges both in and outside the United States.

SOL grew in value from bellow $1 to a peak price of $258 per token with a market capitalization of more than $77 billion, on November 5, 2021. The suit states that from April 2020 defendants spent “vast sums of money promoting SOL securities throughout the United States.”

SOL/USD price chart

The plaintiff alleges that throughout this period, defendants made misleading representations, such as about the number of SOL supply or about Solana’s network decentralization.

“Contrary to defendants’ public representations, however, SOL is not decentralized, because company insiders hold a substantial percentage of them. As of May 2021, insiders held 48% of the SOL supply. The network is thus highly centralized,” the document states.

SOL class action

The plaintiff also argues that selling SOL violates rules around registered securities.

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“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.”

Rosen Law Firm, who has filed the class action lawsuit on behalf of purchasers of SOL tokens between March 24, 2020 and the present, is now calling on SOL investors wishing to join the class action.

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Solana (SOL) logo against red background with lines representing downward market moves. A logo of Solana (SOL).

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