A class action lawsuit that was filed in April of 2018 has commenced against the creators of the Nano (NANO) cryptocurrency, in which the plaintiffs allege that developers “violated federal securities laws.” The lawsuit is being handled by Silver Miller Law and Levi Korsinsky, LLP, both US-based firms specializing in securities fraud and/or investment loss. The full text can be found here.
Specifically, the suit claims that developers of Nano - which was previously called “RaiBlocks” before a rebrand earlier this year - “recklessly” encouraged plaintiffs to buy the cryptocurrency on a little known Italy-based exchange called BitGrail, which at the time hosted most of RaiBlocks’ trading volume.
BitGrail (now apparently non-functional) claimed to be hacked last February, but was generally accused of conducting an exit scam. The event caused the value of then-RaiBlocks to plunge 20% in price. Almost $200 million worth of RaiBlocks tokens were either stolen or removed from the exchange.
Notably, the founder of BitGrail Francesco Firano asked the RaiBlocks(/Nano) developers at the time to hardfork the currency in order to return users’ funds to them, à la the Ethereum hardfork which birthed Ethereum Classic. The developers refused.
However, the current lawsuit formally requests that Nano developers conduct such a “‘rescue fork’ or some other procedure” in order to reimburse burned investors.
There are altogether eleven charges brought against the team, two of them being often-cited violations of Sections 12(a)(1) and 15(a) of the US Securities Act of 1933.
The filing claims that “the success of the investment opportunities and any potential returns thereon were entirely reliant on Defendants’ ability to maintain and expand the functionality and popularity of [RaiBlocks/Nano], thus providing financial returns to investors.”
Whether or not - and which - cryptoassets are considered securities under US law is still a murky and inchoate issue. Although at least two of the best known digital assets, Bitcoin and Ethereum, have been grandfathered in as non-securities, perhaps the next-best known one - XRP - is still languishing in legal limbo.
CryptoGlobe recently reported on the US Securities and Exchange Commission’s efforts to prosecute what it sees as securities violators. There has been recent talk about changing the aged 1933 law to accommodate the emerging asset class that is cryptoassets.