Solana Labs becomes the latest crypto company against which a lawsuit has been filed, for promoting an unregistered security. In doing so, Solana is said to be used for manipulation, whereby insiders profit while retailers suffer immense pain.
Solana controversy (SOL)
A lawsuit against Solana Labs was filed July 1 in the district court designated for Northern California on behalf of plaintiff Mark Young. Roche Freedman LLP and Schneider Wallace Cottrell Konecky are behind it. It names such entities as: Solana Foundation, Anatoly Yakovenko, Multicoin Capital Management, Kyle Samani and FalconX. The allegation that has been constructed against them concerns the sale of unregistered securities, in the form of Solana (SOL). As the wording of the lawsuit states:
“The defendants made huge profits through the sale of SOL securities to retail investors in the United States, in violation of federal and state securities registration laws, and investors suffered huge losses.”
The plaintiff in this case is expected to take action on behalf of a broader group of investors, alleging that SOL issuers misled them by making false statements about the supply of coins publicly.
Is Solana really centralized?
According to available data, the lawsuit includes allegations that Anatoly Yakovenko made a loan worth 11.3 million SOLs as recently as April 2020. The information was said to have been kept secret. A little later, Solana Labs announced that it was going to reduce the supply of coins by that very amount. Meanwhile, barely 3.3 million SOLs were burned.
There have also been allegations about Solana’s decentralization. According to the reason, “In May 2021, insiders held 48% of the SOL supply. The network is therefore highly centralized.”
Will Solana Labs follow the path of Ripple?
Although Solana Labs has not been sued by the SEC, the case appears to be just as serious. Recall that the SEC took aim at Ripple, accusing the XRP token issuer of illegally trading an unregistered security.
In this case, there are a number of similarities between the threads. As a result of the lawsuit, XRP was delisted from trading on leading US exchanges such as Coinbase and Kraken. Theoretically, in the event of a possible tightening of the investigation, similar problems could threaten Solana. For the time being, however, the coin does not seem to be reacting to the allegations and is trading in a safe area, set between $30.00 and $40.00.