Solana Ecosystem Sued for Securities Violations and ‘Illegal Profiting’

Solana Ecosystem Sued for Securities Violations and ‘Illegal Profiting’

A Solana ecosystem lawsuit has been filed in California federal court by an investor who claims significant players within this ecosystem have been illegally profiting from SOL, the blockchain's native token.

Solana Faces Criticism

The investor Mark Young alleges that Solana Labs, its Foundation, co-founder Anatoly Yakovenko, Multicoin Capital Management, its co-founder Kyle Samani, and FalconX violated federal securities laws.

The class-action lawsuit was filed in a California district court against the defendants for selling Solana as securities without any registration statement and promoting those unregistered securities.

In the last few years, many crypto companies have been facing similar lawsuits over securities violations.

The suit was filed on behalf of Young by his attorneys from Roche Freedman and Schneider Wallace Cottrell Konecky. They claim that he has incurred losses, which gave them the responsibility to take legal action against those who are responsible for these damages.

The lawsuit claims that SOL was a centralized cryptocurrency, with the defendants benefiting from it at retail investors' expense. So far, they haven't offered any comments on this issue.

The lawsuit claims that the token passed Howey's tests to determine if an asset is a security. The filing claimed,

"Purchasers who bought SOL securities have invested money or given valuable services to a common enterprise, Solana. These purchasers have a reasonable expectation of profit based upon the efforts of the promoters, Solana Labs and the Solana Foundation, to build a blockchain network that will rival Bitcoin and Ethereum and become the accepted framework for transactions on the blockchain."

Solana Ecosystem Bearing Up Despite Crash

It's been a tough year for the crypto industry, but the cryptocurrency market crash has not seemed to affect Solana as much as it affected some other major tokens. The blockchain continues its rapid expansion with $2 billion worth of non-fungible tokens sold. Also, the Solana NFT marketplace Magic Eden secured yet another funding worth $130 million in a Series B round.

To help foster the development of Web3 technology in South Korea, Solana Foundation announced a $100 million fund. With so many new developments, it's clear that the ecosystem is thriving and ready for anything.

The lawsuit doesn't seem to have affected SOL at all as it continues its bullish run. 

<span style="font-weight: 400;">SOL price | Source: <a href="">Coinmarketcap</a> </span>
SOL price | Source: Coinmarketcap 

Yesterday, the price of Solana crashed dramatically to $33. But soon after it spiked up again and reached $37. It then continued its upward movement today and reached $37 which is its current price. SOL has been up 2.98% in the last 24 hours with a trading volume of $1,160,176,627 and a live market cap of $12,722,548,205. SOL currently ranks at #9 in the cryptocurrency rankings.

It will be interesting to see how this lawsuit plays out, but for now, it seems like the ecosystem is doing well. The company has its eye on expanding even more.

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