Solana accused of being ‘centralized’ ‘security ’

The network’s creator, founder, and partners are accused of benefitting from the sale of unregistered security.

Layer-1 blockchain Solana (SOL) is confronted with a class-action lawsuit in California brought by Mark Young, an investor in the cryptocurrency.

According to the court petition, the Solana Foundation, Anatoly Yakovenko, Solana Labs, Multicoin Capital, and FalconX benefitted from the sale of an unregistered security.

Mark Young had acquired SOL in August and September 2021 but quickly found that the token was unregistered securities that resulted in massive losses for regular investors in the United States.

Founder and partners benefitted from SOL sales

The complaint stated that the defendants, including Multicoin Capital, marketed the tokens after purchasing them for $0.4 in 2019 and sold millions of SOL to retail investors at a profit. FalconX is accused of assisting the dumping of SOL tokens by Multicoin Capital.

Solana peaked at $258 in November 2021 amid the bull run of the crypto market. Per the complaint, this was achievable thanks to the defendants’ efforts, and they gained from the large growth in value while the typical investor recorded losses.

Solana’s decentralization claims questioned

The 40-page complaint also questioned the idea that Solana is decentralized. Young stated insiders control 48 percent of SOL’s entire supply as of May 2021, while Solana Foundation had 13 percent , which makes it incredibly consolidated.

Solana Labs and its insiders control more than 50% of the overall SOL supply, hence SOL’s worth relies on the defendants’ efforts.

Additionally, the complaint argued that Solana’s frequent network disruptions demonstrated that it is centralised. It said:

The complaint also noted to some of the “misleading statements” ascribed to Solana. For instance, Solana Labs founder Anatoly Yakovenko stated the Foundation agreed to lend 11.4 million SOL tokens to a market maker in 2020.

Also Read: CryptoPunk Sells For $2.6 Million As The Floor Prices Of Major NFT Brands Rise