This year’s issues with several of the crypto networks seem to have created a never-ending domino effect of difficulties. Next in line for trouble is the Solana network, or more precisely the Solana Labs, which has been accused of unregistered security promotion.
A class-action lawsuit was filed on behalf of plaintiff Mark Young, a California resident. The official document claims that Solana Labs was selling unregistered SOL tokens since March 24, 2020, saying:
“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.”
Furthermore, the plaintiff is convinced that Solana Labs was making “deliberately misleading statements” that had to do with the total amount of the SOL token supply. According to the document, Solana Labs founder Anatoly Yakovenko lent 11.3 million tokens in April 2020 to a market maker, which has remained an undisclosed piece of information to this day.
The plaintiff also adds: “As of May 2021, insiders held 48% of the SOL supply. The network is thus highly centralized,” which does not bode well with the recent scandal of Solana Labs trying to control its biggest investor’s assets.
This is the second scandal to befall the Solana network within a month. Hopefully, we will not be witness to yet another market crash, especially after the Terra Luna incident.