The network’s developer, founder, and partners are accused of profiting from the sale of an unregistered security.
Layer-1 blockchain Solana (SOL) is faced with a class-action lawsuit in California filed by Mark Young, an investor in the token.
According to the court filing, the Solana Foundation, Anatoly Yakovenko, Solana Labs, Multicoin Capital, and FalconX profited from the sale of an unregistered security.
The 40-page lawsuit also attacked the claim that Solana is decentralized.
Young said insiders hold 48% of SOL’s total supply as of May 2021, while Solana Foundation held 13%, which makes it very centralized.
“Because Solana Labs and its insiders directly control more than 50% of the total SOL supply significantly, the underlying value of SOL depends primarily on the efforts taken by Defendants.”
Misleading statements
The lawsuit also pointed at some of the “misleading statements” attributed to Solana.
For instance, Solana Labs founder Anatoly Yakovenko said the Foundation decided to lend 11.4 million SOL tokens to a market maker in 2020.
The lawsuit continued that the Foundation promised to remove the 11.4 million tokens from circulation in 30 days. But Solana only removed 3.3 million tokens eventually.