Contained in the suit, Solana’s SOL token is an unauthorized security whose insiders have gained while retail suffered. The class action suit filed in California federal court last week charges key players in the Solana ecosystem with illegally profiting from SOL, the blockchain’s native token that, according to the suit, is an unauthorized security. “The cornerstone of the value of SOL securities is the sum of Solana Labs, Solana Foundation, and [Anatoly] Yakovenko’s management and implementation of the Solana blockchain.” According to the suit, it depicted SOL as a highly centralized cryptocurrency that has profited its insiders to the disadvantage of retail traders.

Filed by a California resident Mark Young, who stated that he purchased SOL in late summer 2021, the suit names Solana Labs, the Solana Foundation, Solana’s Anatoly Yakovenko, crypto VC giant Multicoin Capital, Multicoin’s Kyle Samani, and trading desk FalconX. 

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According to Young, he alleges that the way SOL was built and sold meets the three tenets of the Howey Test, a U.S Supreme Court ruling that is commonly used as a barometer for whether the sale of something is a security or not.

“Purchasers who bought SOL securities have invested money or given valuable services to a common enterprise, Solana. These purchasers have a reasonable expectation of profit based upon the efforts of the promoters, Solana Labs and the Solana Foundation, to build a blockchain network that will rival Bitcoin and Ethereum and become the accepted framework for transactions on the blockchain,” the filing addressed the three forks of the Howey Test.

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