Crypto investment firm Invictus Hyperion has filed a lawsuit against Menlo Inc., a blockchain company, for artificially inflating its token value to boost its $3 million token sale.
According to the legal complaint filed on Monday Invictus accused the blockchain company of misrepresenting its products, leading to an investment of $250,000, which the investment company could not recover at this stage.
“Defendants pocketed large sums of money for their promotional efforts, and — due to their many misrepresentations, factual omissions, and unlawful action — [Invictus Hyperion] will not see any return on its investment,” a part of the complaint noted.
After its initial coin offering (ICO) in November last year, the value of the token plummeted by more than 94 percent and is currently trading at $0.000467 apiece, as seen on Coinmarketcap.com.
Focus on marketing instead of developing
The investor also accused the blockchain company of not coming out with any viable products, instead, it claims the firm is putting its efforts in marketing with “buzzwords.”
“The Defendants, as insiders, enriched themselves at the expense of their investors.” Invictus Hyperion mentioned in the complaint.
In addition, Invictus claims that the token of Menlo falls under the category of securities and the company has not registered with the Securities and Exchange Commission or follows any regulatory rules.
“Based upon current legal standards, MET/One Tokens are ‘securities’ subject to federal and state securities laws and should not be allowed to be traded on U.S. exchanges because they were not properly registered and were not exempted from such registration,” the complaint noted.
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The company is registered in Cayman Island to circumvent regulatory needs in the United States.
Menlo Inc., popularly known as Menlo One, is developing a framework for decentralized applications and focusing its services to enterprises.
“[Invictus Hyperion] detrimentally relied on these misstatements, misrepresentations, and omissions of material fact, including [these] examples, when it decided to purchase, acquire, hold, and not sell the MET/One Tokens,” Invictus added in the legal filing.
The investor is now claiming at least $75,000 as damages from the blockchain company, along with the associated legal charges.
Though the complaint against Menlo One was filed on July 1, the company recently, in an official Medium post, tried to clarify a few the criticisms against it.
“In the opinion of Menlo One and our legal counsel, no our token does not meet the requirements to be considered a security. We consider our ONE token a product, not a security,” the company stated.
There have been a few changes in the regulatory landscape regarding blockchain and cryptocurrencies. We’ve been getting asked a lot of the same questions, so we put together this FAQ. https://t.co/4jgkiQkEH5
— Menlo One (@menloone) May 30, 2019