A California federal court recently accepted a petition from a plaintiff for bringing a class-action lawsuit against Paragon ICO. The Paragon Coin was the crypto token of the cannabis firm which raised $70 million from investors.
Paragon has a sketchy history
This is not the first time that Paragon’s crypto ambitions have been challenged. The company was earlier fined and was forced to register its coin as security. The company raised $70 million via a 2017 Initial Coin Offering (ICO) and aimed to make the Paragon coin of PRG coin the de facto cryptocurrency for the cannabis industry.
The district court judge had cleared the motion for federal claims on June 24. However, he denied an application for claims on state levels for investors not living in California. The judge ruled,
“Plaintiffs concede there may be class members in all 50 states and concede that laws governing the state law claims at issue differ among jurisdictions in such a way that a true conflict exists.”
The said also pointed out that even though the company is based in California, the sale was conducted over the internet because of which it should represent a much diverse group of audiences.
Paragon has previously faced a class action
The project first faced a class-action lawsuit in January of 2018. The company was then forced to register its token as security after pressure from the SEC increased. It also had to pay a fine of $250,000. Though the company has now settled with the SEC, the investors still suggest that they were fooled by the company.
Rapper The Game endorsed this project and was dragged to court for the same. Other celebrities, like rapper DJ Khaled and athlete Floyd Mayweather also faced criticism for their endorsement of digital currencies. One of these projects also turned out to be a major fraud.
The US Supreme Court ordered that the SEC cannot impose arbitrary penalties on financial scammers. Moreover, the fines it collects should go directly to the victims of the fraudulent scheme. This ruling can change the story for ICOs that had to pay heavy fines to the regulator.