A class action lawsuit filed in federal court in California last week accuses key players in the Solana ecosystem of illegally profiting from the native SOL token, which is said to be an unregistered security.
The cornerstone value of SOL securities is the sum of the efforts of Solana Labs, Solana Foundation and Anatoly Yakovenko in managing and distributing the Solana blockchain, the suit states.
SOL is also described as a highly centralized cryptocurrency that benefits its insiders to the detriment of retail traders.
California resident Mark Young claims he bought SOL in late summer 2021 and the decision was influenced by Solana Labs, Solana Foundation, Anatoly Yakovenko, cryptocurrency venture capital giant Multicoin Capital, Kyle Samani of Multicoin and trading arm FalconX.
According to the complaint, the way SOL is issued and sold meets the three principles of the Howey test, which is used to determine whether an asset is a security or not.
Purchasers of SOL securities have invested in or performed services for the Solana enterprise. These buyers expect reasonable returns that depend on the promoters of Solana Labs and the Solana Foundation creating a blockchain network that will compete with bitcoin and Ethereum and become the basis for blockchain transactions,” the statement said.
Until regulators do their job and make a clear classification of cryptocurrencies, confusion and lawsuits will only multiply.