It is a dejavu moment in the crypto space as Solana faces the same backlash similar to that of Ripple LABS. Roche Freedman LLP and Schneider Wallace Cottrell Konecky in the district court of California have filed a suit alleging Solana Foundation of seeing SOL as a security from 2020 onwards to raise funding.
How is This Similar to Ripple?
In 2013, the Ripple LABS had raised funds to the tune of $1.3 billion to fund their development. Furthermore retail investors got Ripple as airdrops for market speculation.Such acts are not in compliance with the SEC standards when dealing with an asset class which is not a security.
Why This Event is Such a Big Issue?
The Solana Labs secret token issue has created a furore in the crypto market. The prime reason for the same is a single party holding 48% of the token supply. The market cap of Solana may plummet if the case doesn’t go in Solana Labs favour. That would make Solana a security compelling exchanges to furnish all details. That said, most of the crypto exchanges will delist Solana and the market will come crashing for the token.
Solana’s controversial journey isn’t new either. In the past network outages and centralisation of validator nodes have already raised concerns. That said, investors’ sentiments are hanging by the thread and the ruling will be decisive for the token.