New lawsuit for Block.one which failed to decentralize EOS

A cryptocurrency investment fund has initiated classroom lawsuit in a United States court against Block.one and the high command of EOS, claiming that the "fraudulent plan" failed to deliver on its main promise of decentralization. .

"Materially False and Misleading Statements" to Sell Multiple EOS Tokens

The Crypto Assets Opportunity Fund (CAOF), together with investor Johnny Hong, accused Block.one, CEO Brendan Blumer, CTO Dan Larimer, former Chief Strategy Officer Brock Pierce and former partner Ian Grigg, of having attempted to “capitalize on fervor for cryptocurrency investments” in 2017 by promoting an illegal sale of securities.

In a report formulated with the Southern District of New York, the plaintiffs claim that the defendants intentionally deceived investors and artificially inflated the price of the eos token during the initial coin offering (ICO), which raised a total of 4.1 $ billion between June 2017 and June 2018.

Both COAF and Hong are seeking damages. The lawsuit filed earlier this week has six counts. These include the fact that Block.one aggressively marketed its token sale in the United States without first registering it with the Securities and Exchange Commission (SEC).

But the crux of the case is the accusation against Block.one and its representatives who would have made "dozens of materially false and misleading statements" about EOS, especially in attempts to promote it as a new superior type of decentralized protocol. The plaintiffs claim that EOS has always been publicly described as decentralized, and that this was a crucial part of the white paper and a broader presentation of the ICO. But, they argue, this turned out to be false already in the launch of the protocol.

It was the 21 block producers (BP) that truly controlled the ecosystem rather than the community itself, the report said. "Block.one did not have the ability to create a decentralized EOS blockchain," concludes the lawsuit.

One case after another for Block.one

CAOF is an Illinois-based collective fund established in 2017 under the shield of Victoria Capital, a blockchain-specific investment and advisory fund. It's unclear when CAOF invested in the ICO EOS or how much, although a post from Victoria Capital's CEO Brandon Elsasser, who is also Chief Investment Officer (CIO), stated in a July 2018 update that the fund had given up on invest further in ICO since it presented a greater risk than was considered prudent.

Block.one reached an agreement with the SEC last September, agreeing to pay $ 24 million in damages for performing an unregistered sale of securities in exchange for a waiver of the legal restrictions that would normally apply.

During this process, SEC's co-director of the control division Steven Peikin said in a statement that Block.one had failed to provide investors with the information typically included in a sale of securities. Considering that the $ 24 million penalty represented 0.58% of the initial budget, some criticized the agreement because it was poorly proportioned with the size of the company.