US Judge approves class-action lawsuit against Paragon Coin’s ICO
- The SEC had previously penalised Paragon Coin with a £201,000 fine for not registering its token.
- According to the judge, the ICO was conducted over the internet.
- This case also dragged rapper The Game into the lawsuit.
A Californian federal judge has approved a class-action lawsuit against cannabis crypto firm Paragon Coin Inc. A report unveiled this news on June 24, stating that the lawsuit claims Paragon’s £52.26 million initial coin offering (ICO) in 2017 violated securities laws. Paragon Coin reportedly promoted its PRG token as the cryptocurrency for the cannabis industry.
According to the report, US District Judge Jeffrey White cleared the motion for federal claims. However, he denied applications for claims at the state level on behalf of investors that are based outside California. The suit alleges that Paragon Coin issued PRG tokens for its headquarters in California. Nevertheless, Judge White ruled that both the ICO that gave rise to the plaintiffs’ complaints and the purchases of PRG tokens were conducted over the internet.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
As such, the judge ruled that,
“Plaintiffs concede there may be class members in all 50 states and concede that laws governing the state law claims at issue differ among jurisdictions in such a way that a true conflict exists.”
Paragon Coin’s costly run-in with the SEC
This news comes after Paragon Coin first got served with a class-action lawsuit in January 2018. The plaintiff in the case was investor Astley Davy, who proposed that the company should disgorge its earning for purportedly failing to register its token with the SEC. Later that year, rapper the game got dragged into the lawsuit for promoting the project’s ICO.
Following this lawsuit, the SEC pressurized the firm until it accepted to register its token as a security. On top of this, the regulator slapped the company with a £201,000 fine for failing to register its token. Per the SEC, this penalty was the first of its kind. However, despite the settlement with the SEC, the project’s investors still cried foul.
Do you think Paragon Coin’s ongoing lawsuit could open up the firm to more lawsuits? Share your thoughts in the comment section below.