Bad news for Solana (SOL). Solana Labs, the organization behind the cryptocurrency, is being taken to court in the United States. The company is accused of illegally selling SOL tokens as securityor effect, without having the necessary licenses for this.
Solana in legal trouble?
The lawsuit was brought by two law firms in California on behalf of Mark Young. The lawsuit alleges that Solana Labs, the Solana Foundation, Anatoly Yakovenko, Multicoin Capital Management, Kyle Samani and FalconX have violated US securities laws as of March 2020.
“The Defendants have made huge profits from selling SOL securities to retail investors in the United States in violation of the registration provisions of the federal and state securities laws, and the investors have suffered huge losses,”
Mark Young says he is standing up for other SOL investors. According to him, Solana Labs has deliberately shared misleading information about, among other things, the total supply of SOL tokens. In addition, the claim that the Solana network is decentralized is disputed. The indictment alleges that 48% of all SOL tokens are owned by ‘insiders’. According to Mark Young, there is therefore no question of decentralization at all.
Similar to the XRP lawsuit
The lawsuit could have major consequences for the Solana network. In the long run, it could even mean that SOL will be removed from the range of major exchanges such as Binance and Coinbase.
The comparison with the lawsuit of the American Securities and Exchange Commission (SEC) against Ripple (XRP) is also distressing. Ripple Labs, like Solana Labs in this case, was accused of selling XRP tokens as a security without authorization from the authorities. The consequences of this lawsuit for the Ripple network are still being felt.
In addition, the timing of the lawsuit against Solana Labs is not optimal. The network has been struggling with major problems for months. For example, in the past 12 months alone, the network has been used at least 7 times completely or at least partly from the air been.