- Elastos has settled a four-and-a-half-year class action lawsuit in the US, allowing ICO investors to claim back their investments
- The lawsuit, initiated by ICO investors led by Mark Owen, alleged that the Elastos violated securities regulations by not registering the ICO with the SEC
- A settlement has been reached without Elastos admitting fault, enabling ELA token buyers to potentially recover some of their investment
Elastos has settled a four-and-a-half-year class action lawsuit in the US, with ICO investors now able to submit claims through the claims portal. The blockchain company, which held its ICO in January 2018, has settled a $2 million claim filed in February 2019 by investors aggrieved at what they felt was an unregistered sale of securities. Following a lengthy back and forth, the claim has been settled without Elastos admitting any fault, leaving ELA token buyers free to recoup some of their investment.
Plaintiffs Claimed Elastos Violated Securities Act
The class action lawsuit started out when a group of ICO investors, led by plaintiff Mark Owen, requested the New York Supreme Court to summon the Elastos Foundation, its team members, as well as the crypto exchange Huobi and its US partner, HBUS, in response to their grievances. The filing asserted that the Elastos ICO violated Section 5 of the Securities Act of 1933, which requires all sales to be registered with the SEC beforehand.
The summons alleged that the token distribution constituted an unregistered sale of US securities, contending that ELA tokens were marketed as an investment, expected to appreciate in value as Elastos expanded its ecosystem and user demand grew. In the project’s whitepaper, ELA tokens were described as utility tokens meant for trading, exchanging value on the Elastos blockchain, and covering network fees.
Holders were encouraged to participate in a three-year lockup period, with the promise of earning 6% returns on their assets. The project later announced the termination of this scheme in October.
Claimants Have Until 6 December
A lengthy legal battle has ensued, with Elastos and Huobi initially denying the claims. However, the end result is a settlement agreed upon yesterday which will allow anyone who purchased or acquired ELA tokens in “domestic transactions” in the Elastos ICO, the lock-in program, or on the secondary market between January 1, 2018, and July 27, 2023, to file a claim.
Claimants have until 6 December to file their claims, exclude themselves or protest against the lawsuit, with a hearing due at the United States District Court for the Southern District of New York on December 22. After fees, it is expected that around $1 million will be distributed to approved claimants.
