Block.one, the issuer of EOS token, is facing another class-action lawsuit in the United States for selling unregistered securities.
Two plaintiffs – Crypto Assets Opportunity Fund LLC and Johnny Hong – filed the class-action lawsuit on Monday in the US District Court for the Southern District of New York.
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Along with Block.one, the lawsuit also named the company’s CEO Brendan Blumer, CTO Daniel Larimer, cryptographer and previous partner Ian Grigg, and previous adviser Brock Pierce as the defendants.
The legal complaint alleges that EOS falls under the category of unregistered securities in the United States and the defendants misled the investors by providing false and misleading information.
“To drive the demand for and increase profit from the sales of EOS Securities, Defendants further violated the securities laws by making materially false and misleading statements about EOS, which artificially inflated the prices for the EOS Securities and damaged unsuspecting investors,” the complaint alleges.
Squabble with the regulator
EOS was neither registered with the Securities and Commission Exchange (SEC) as security, nor it obtained an exemption certificate from the regulator.
To avoid conflict with the SEC, Block.one asked the investors in the United States not to participate in the token sale in its pre-sale agreement.
Notably, the project raised $4 billion in a year-long token sale round with participants from around the world, including the US.
Last year, the US regulator also fined the project with $24 million following a settlement for securities law violation.
Block.one claims that its blockchain will outperform any other blockchains available in the market. However, the lawsuit even questioned the decentralization aspect of the project.
“From 2017 through the present, to drive demand for EOS Securities, Defendants have aggressively courted investors throughout the United States. Block.one first announced itself at a May 2017 conference in New York City, and punctuated its arrival with expensive ad space on a Times Square billboard,” the lawsuit read.