A Solana investor has filed a class action lawsuit against major stakeholders in the Solana network for allegedly benefitting off SOL, the native coin of the blockchain which, according to the claim, is an unregulated security.

The filing was made in California by legal counsels representing a homeowner. Based on the specifics of the complaint, it was filed early this month with Mark Young as the plaintiff.

Among the defendants were the popular venture capital company Multicoin Capital and its chief executive Kyle Samani, one of the most avid Solana backers.

According to the lawsuit, “Solana Labs, Solana Foundation, and [Anatoly] Yakovenko’s administration and development of the Solana blockchain are the foundation of the value of SOL equities.”

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Image: Changelly

Solana Token Offered Without Legal Documentation?

The California district court argues that the defendants marketed supposedly unregistered securities and offered SOL cryptocurrency as securities without legally registering them.

The lawsuit characterized SOL as a highly centralized cryptocurrency that favored its insiders at the expense of regular investors.

Since April 2020, based on court records, the defendants allegedly spent extravagant sums publicizing SOL in the United States, which apparently increased its price to $258 per token and market worth to $77 billion as of November 5, last year.

“These promotional activities elevated SOL securities from a relatively minor crypto-asset to one of the world’s leading crypto-assets,” noted Young.

Young requests that the court compensate him and other plaintiffs “damages to be determined at trial.”

Although SOL was among the top-performing tokens in 2021, its record high of $259 has already fallen by more than 85% from its current price. It currently stands at $36.83, down 0.6% over the previous 24 hours.

SOL total market cap at $12.8 billion on the daily chart | Source: TradingView.com

Solana Intact Despite Market Downturn

Throughout the years, claims of securities violations have been made against a large number of other cryptocurrency firms. In this case, the plaintiff asserts that he has experienced damages and is therefore required to file a lawsuit.

The recent market downturn has harmed a number of cryptocurrency ventures, but Solana does not appear to be among them.

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A Series B group of investors recently committed $130 million in Magic Eden, an NFT marketplace based in Solana. Furthermore, NFT sales on the blockchain have just reached a record $2 billion.

Once the lawsuit commences, it could have a negative impact on the crypto market and the circulation of Solana.

Should the court determine that the token is a security, the majority of crypto exchanges would delist it.

In 2020, when XRP was involved in a legal dispute with the U.S. Securities and Exchange Commission, the same action was taken.

Featured image from Fierce Pharma, chart from TradingView.com