Solana heads to court

Amid a weak market, Solana's founders now have to answer to a judge.

In the middle of a weak market, the founders of Solana now have to answer to a judge. The allegations: selling unregistered security tokens.

The founders of the “high-speed blockchain” Solana will soon have to account for themselves in a California court. A class-action, represented by Schneider Wallace Cottrell Konecky LLP and Roche Freedman LLP, accuses the responsible parties of selling “unregistered security tokens,” which violates U.S. law. The defendants allegedly earned “huge profits” from the sales while investors suffered “huge losses,” the complaint says.

Additionally, the responsible parties allegedly made “misleading statements” about the amount of SOL tokens in circulation. Co-founder Anatoly Yakovenko, for example, lent 11.3 million coins to a market maker and promised to take the amount out of circulation later. In reality, only 3.3 million tokens were “burned.”

Solana also made false promises about the network’s “decentralization.” Here’s what the complaint states:

''Solana’s website claims that SOL is “decentralized and unstoppable”... But by May 2021 insiders had 48 percent of the supply. The network is thus highly centralized.''

The lawyers conclude that their clients suffered “significant damages” due to the defendants’ alleged lack of technical and financial knowledge.

Solana network under fire after crash spree

As the folks behind the Solana project likely face legal trouble soon, the network first has to fix technical shortcomings. The self-styled “high-speed blockchain” has already experienced five failures this year — the most recent in early June. Critics blamed design flaws. The result was the SOL token price plunging from a peak. At press time, the cryptocurrency was trading at $38.54. The announcement of its own smartphone mid last month also sparked mixed feelings in the community. One user said it would be better to focus on keeping the blockchain running.