Solana Labs, Multicoin Accused of Violating Securities Law by SOL Investor

July 6, 2022

A Solana spokesperson declined to comment. Multicoin and FalconX did not immediately respond to a request for comment.

According to the complaint, Young alleges that the way SOL was created and sold meets the three tenets of the Howey Test, a U.S. Supreme Court precedent 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 said, addressing the three forks of the Howey Test.

In the filing, Young pointed to several sales of the SOL token or agreements to sell the SOL token ahead of the public sale of the token.

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