Compound Decentralized Autonomous Organizations (DAO), one of the most popular lending and borrowing protocols in the Decentralized Finance (DeFi) ecosystem have been charged with selling unregistered COMP token securities.
According to the filed document, plaintiffs, Amanda Houghton, Charles Douglas, and Susan Franklin are seeking annulment damages because Compound DAO and the Partner Defendants encouraged sales of COMP tokens to the public without being registered or qualified to do so.
The plaintiffs also contended that the price of COMP had since plummeted and that the defendants were to blame. Additionally, the filing claimed that the defendants misrepresented the likelihood of earning money by holding COMP tokens.
COMP is a form of security. Users buy COMP to gain a stake in the Compound business, hoping to profit from the efforts of the Partner Defendants and a few other people who control and manage it.
It was also stated in the filed document that Compound DAO offers COMP directly to investors over the Compound protocol in return for using the service and paying fees.
In addition, Compound DAO and the partner defendants also advocate sales of COMP on the secondary market by heavily promoting COMP, working to create and support a thriving secondary market for COMP, and taking other actions required for the mass distribution of COMP to investors.
Court Proceedings in the Crypto Space
The turmoil in the crypto market has brought about a lot of changes in the industry, some investors and firms are now looking towards the direction of the court to seek solace.
As regards exchanges that have filed for bankruptcy protection, a United States Bankruptcy Court ruled that an impartial examiner would look at several aspects of Celsius Network’s digital asset holdings.
According to reports from thecoinrise, US Bankruptcy Judge Martin Glenn granted this request even though the examiner has not yet been selected. The examiner will check how Celsius stores its bitcoin assets in this case and whether different account types are ever combined.
In addition, Celsius Network has also gotten permission from a bankruptcy court to sell mined crypto for its operations.