A U.S. District Court has given the green light to a long-standing class action lawsuit against the creators of HelbizCoin. This ruling, filed on Sept. 1, is a significant development in a case that has spanned nearly three years.
The Genesis of the Lawsuit and Allegations of Deception
The lawsuit was initially brought against Helbiz, its CEO Salvatore Palella, and its partners in 2020. Also, it gained momentum with an amended complaint filed in March 2022. At the heart of the matter is Helbiz, an Italian electric scooter-sharing company that raised a staggering $38.6 million in an ICO, issuing an ERC-20 token in collaboration with Ethereum co-founder, Anthony Di Iorio, back in 2018.
A cohort of investors, numbering as many as 20,000, made serious allegations against HelbizCoin. They contended that the cryptocurrency was nothing more than a rug pull and a fraudulent pump-and-dump scheme. The investors argued that Helbiz had enticed them with false statements and promises to purchase the tokens. However, in reality, the company had kept the lion’s share of the ICO funds.
Court’s Ruling
On September 1, the US District Court for the Southern District of New York delivered its verdict, partially favoring the investors who filed the class action suit. The court granted some motions to dismiss and denied others.
Notably, the court dismissed all claims against certain defendants, including Paysafe, Skrill, Decentral, and Alphabit, citing a lack of personal jurisdiction. However, it upheld claims related to fraud, price manipulation, violations of securities and commodities laws, the RICO Act, and unjust enrichment against some defendants.
One pivotal outcome of the case was the court’s determination that the ERC-20 token qualifies as a security under federal law. This finding adds a new layer to the legal landscape surrounding cryptocurrencies.
A Legal Odyssey
This lawsuit’s journey has been far from straightforward. Initially dismissed by a lower court judge in January 2021, the case was rekindled in October 2021 when a 2nd U.S. Circuit Court of Appeals overturned the lower court’s decision. The subsequent filing of an amended complaint in March 2022 propelled the case forward.
Blockchain Transparency Unveils Truth
The lawsuit also unveiled the power of blockchain transparency in uncovering illicit activities. The complaint presented various charts that utilized the Ethereum ledger to demonstrate spoof trading in the ICO. Additionally, it showcased evidence of “genesis wallets” distributed to initial Ethereum investors, including Mr. Di Iorio, highlighting the role of blockchain in exposing wrongdoing.
The complaint accused Anthony Di Iorio, an advisor to Helbiz, of publishing false and misleading statements about the HelbizCoin ICO in Bitcoin Magazine. However, the ruling questioned the adequacy of evidence supporting these allegations, emphasizing the speculative nature of the claims.
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