U.S. District Court’s Landmark Ruling on HelbizCoin
On Sept. 1, a significant ruling by the US District Court for the Southern District of New York gave the green light for a class action suit against Helbiz, its CEO Salvatore Palella, and associates, to proceed further.
Historical Backdrop of the Suit
Helbiz, an Italian e-scooter firm, amassed a whopping $38.6 million through an ICO, and released an ERC-20 token in partnership with Ethereum co-founder, Anthony Di Iorio, back in 2018. Investors, which numbered around 20,000, contended that HelbizCoin was a deceitful setup – a classic rug pull, accusing the company of false advertising to lure in coin purchases. Allegedly, the lion’s share of the ICO money was pocketed by Helbiz itself.
Partial Victory for HBZ Investors
Though the court granted some motions to dismiss, it notably rejected many, keeping significant portions of the lawsuit alive. Companies such as Paysafe, Skrill, Decentral, and Alphabit were exempted from the lawsuit due to jurisdictional concerns and other factors.
Nevertheless, for several defendants, claims like fraud, price tampering, and violations of the RICO Act and securities laws still stand.
Legal Precedents and Further Revelations
Michael Kanovitz, representing the investors, stated, “The case concluded that the ERC-20 token comes under the federal law’s definition of a security.“
Previously, in January 2021, a lower court dismissed this lawsuit, referencing a 2010 Supreme Court precedent. However, by October 2021, the 2nd U.S. Circuit Court of Appeals breathed new life into it, flagging errors in the earlier decision.
Kanovitz highlighted blockchain’s ability to expose illegal activities, using Ethereum ledgers to exhibit “spoof trading in the ICO.”
The Controversy Around Di Iorio
While the complaint claimed that Anthony Di Iorio published deceptive statements about the HelbizCoin ICO in Bitcoin Magazine, there’s no concrete proof. The court described these allegations against Di Iorio as “speculative conclusions.”
The legal battle against HelbizCoin exemplifies the challenges and uncertainties surrounding the rapidly evolving cryptocurrency domain.