Lawsuit Against Nano Devs Commences, ‘Rescue Fork’ Requested for BitGrail Funds

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.

Securities Violation

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.

Telegram Pulls Plug on Its TON Blockchain Platform and Gram Tokens

Telegram is pulling the plug on its Telegram Open Network (TON) blockchain platform and the Grams token, after years of battling with the U.S. Securities and Exchange Commission (SEC).

In an announcement published on his public Telegram channel, the firm’s founder and CEO Pavel Durov said:

Telegram’s active involvement with TON is over. You may see – or may have already seen – sites using my name or the Telegram brand or the ‘TON’ abbreviation to promote their projects. Don’t trust them with your money or data.

In an accompanying blog post, Durov said the SEC’s winning of a preliminary conjunction in a U.S. court led to the decision, as it stopped Telegram from launching the TON network, or distributing the Gram tokens.

The move is rather abrupt as Telegram said less than two weeks ago it was looking to launch the network in April 2021. Last month, the firm announced investors could receive 72% of their funds back immediately, or 110% in a year once TON had launched. In the recent blog post, Durov didn’t specify whether investors would be refunded.

The Telegram Open Network was a blockchain platform that was set to offer anyone with a smartphone access to a decentralized cryptocurrency. Last October, however, the SEC ordered Telegram to halt its token sale as the firm reportedly failed to register an early sale of $1.7 billion worth of Gram tokens with the regulator.

The funds were raised in pre-initial coin offerings (ICOs) that Telegram conducted back in 2018. In his announcement, Durov argued American courts should not be able to stop the sale of the cryptocurrency outside of the country, and urged others to take up the fight for decentralization. Per his words, it may “well be the most important battle of our generation.”

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