Silver Miller and Levi & Korsinsky law firms have lobbed a class action lawsuit against Nano, formerly known as RaiBlocks. According to a press release dated January 7, the law firms have filed the lawsuit on behalf of investors. The suit charges that Nano and its core team have violated federal securities laws by participating in an unregistered offering and “sale securities.” The lawsuit also claims that the defendant instructed the investors to put their Nano tokens (XRB) in BitGrail, an Italian crypto exchange. In February 2018, $170 million worth of XRB purportedly “disappeared” from BitGrail.
The complaint asserts that based on Nano’s assistance, promotion, and instruction, BitGrail has become the “predominate and nearly exclusive home for XRB.” There is even a time when XRB comprises 80 percent of BitGrail’s total trading volume. Nano has persisted on advising investors to utilize BitGrail, despite the numerous warnings issued by Francesco Firano, the CEO of BitGrail. The lawsuit also alleges:
“Simply stated, the Nano Defendants created the XRB currency, they directed XRB investors to place their assets at BitGrail (an exchange that they essentially controlled); and when nearly all of the XRB purportedly safeguarded at BitGrail disappeared, Defendants disavowed any responsibility for the harm the XRB investors suffered.”
Meanwhile, the plaintiffs are demanding to withdraw their investment and for Nano to “rescue fork” the missing XRB. The suit adds that Nano “can rewrite the XRB code and simply restore ownership to Plaintiff … [Nano], however, have refused to implement that strategy because it is not in their own best interests.”
In connection with the XRB/BitGrail mess, this is not the first instance that Nano has been slapped with a lawsuit.
Siller Miller has filed a class action lawsuit on behalf of lead plaintiff Alex Brola in April last year. Just like this latest one, the complaint alleged that Nano infringed on securities laws. It also told Nano to “hard fork” its network to refund investors’ funds.
Nano filed a motion to dismiss in September 2018. Nano disputed that XRB could not be deemed as security since the firm did not receive any money in exchange for XRB tokens. The motion to dismiss added:
“Nano’s value does not derive from a group of managers or executives managing other people’s property; rather, Nano’s value is derived from its utility or potential utility as a currency.”
On the other hand, Brola “voluntarily dismissed” the lawsuit in October last year. While Brola did not provide any reason for dropping the case, Peter Scoolidge, the lead defense counsel, told Law 360 that “the plaintiff withdrew the complaint because the case lacked merit.”