The Solana blockchain is currently under pressure for legal action. Action initiated by Mark Young, investor in the project. If the prosecution thinks the blockchain is not decentralized enough, it is above all about the asset classification that seems to be a problem. The founder, developer and several network partners have today been accused of profiting from the sale of unregistered titles. So, are we heading for Ripple bis? Answers in this article!
Solana: truly decentralized?
According to Young, since last May, 48% of SOL signals have been held by a small group of insiders. At the same time, the Solana Foundation had 13% of the total tokens in circulation. Mostly questioning the idea of a decentralized blockchain. Charge formed within the legal action of about forty pages:
Because Solana Labs and its insiders directly control more than 50% of the total supply of SOL, the core value of SOL depends primarily on their efforts.
The prosecution also frequently uses blockchain breaches. According to Young’s reading, these failures would result in an over – centralized blockchain.
In addition to these manipulation fees on SOL prices, there are other fees as well. Young believes some players like FalconX’s digital asset platform would have facilitated the dumping around the SOL signal. The aggrieved investor believes that this particular type of practice would allow the SOL signal to go above $ 250 last fall.
Misleading statements from Solana?
By law, Solana was also responsible for misleading statements. To support this argument, the legal action carrier cites the Solana Foundation’s loan of 11.4 million SOL tokens to a market maker in 2020. If the Foundation had promised to withdraw those 11.4 million tokens from the market, Solana would have withdrawn finally back. only 3.3 million.
On the other hand, the prosecution believes that Solana failed the “Howey Test“, A test that assesses whether or not an asset is the investment contract. According to the prosecution, Solana would be ranked among the securities. Note that this Howey test is often used by the American financial police, the SEC, to categorize assets.
Asset classification is therefore essential. According to Investopedia, there is an investment contract in a business where profits are expected from the effort of others. In this regard, here is what the prosecution says:
Buyers who bought SOL securities or provided valuable services in a joint venture, Solana, have invested money. These buyers have a reasonable profit expectation based on the efforts of the promoters, Solana Labs and the Solana Foundation, to build a blockchain network that will compete with Bitcoin and Ethereum and provide an acceptance framework for blockchain transactions.
For the time being, representatives from the Solana blockchain have not responded to these elements.
Affect other altcoins?
This legal action could cause many investors to question their own crypto portfolio. In the digital asset industry, asset classification is extremely important. It is then up to the authorities to decide whether or not an asset is a transferable security.
SEC Chairman Gary Gensler said in particular that most digital assets could be classified as securities. For Gensler, Bitcoin would be a notable exception to this classification.
Remember that the SEC is still involved in a lawsuit against the company Ripple, the issuer of the XRP signal. The fate of this case could also determine the fate and classification of a large number of crypto assets.
Read also: The impact of the SEC on XRP development
