Another month, another ICO lawsuit. This time it’s Giga Watt in the firing line, a startup whose aim is to launch a cryptocurrency mining facility. The company describes itself as “the world’s first full-service mining solution provider” and promises “turnkey mining services”. A group of investors are not impressed though, and have filed a lawsuit over project delays that they claim are costing them serious money.
Also read: Drafting Laws and ‘Hodling’: U.S. Congress Discusses Cryptocurrency Disclosure
Watt’s the Matter?
The plaintiffs claim to have contributed around $20 million in cryptocurrency to the Giga Watt ICO last summer. That cryptocurrency is now worth five times as much, but investors have nothing to show for it: no crypto, no Giga Watt tokens, and none of the mining equipment that was meant to be supplied.
In a court filing, the plaintiffs state their “fear that they might never be issued their tokens or see their mining machines activated, and are losing valuable time and money as defendants indefinitely delay the further development of the Giga Watt Project”.
First Tezos, Now Giga Watt
There are clear parallels to the Tezos lawsuit – or rather lawsuits, for the Breitmans are facing several. For one thing, both ICOs went to great pains to stress that their tokens were not securities. The ongoing lawsuits surrounding a number of ICOs will test the waters regarding what constitutes a security. Labeling a token as a utility token doesn’t necessarily make it one.
“Just because utility tokens might one day have a consumptive use does not remove them from being a ‘security’ prior to that use,” claims David Silver, one of the law partners who filed the Giga Watt complaint on behalf of the plaintiffs.
As with the Tezos case, Giga Watt investors are aggrieved at the length of time they’ve been forced to wait for their tokens. Even if both ICOs’ tokens were to materialize now, it is unlikely that investors would be able to realize the sort of gains they could have enjoyed simply by retaining their crypto.
The Giga Watt filing in the U.S. District Court in Eastern Washington states:
Giga Watt representatives have overtly and unmistakably stated to investors that between the time of the ICO and the date on which each investor would be issued his/her/its Giga Watt tokens, the value/price of each Giga Watt token was anticipated to increase significantly.
Giga Watt is the product of Dave Carlson, who has previous experience of failed mining ventures. In 2014, his Megabigpower mining project fell apart after his supposed partners failed to purchase the equipment they had promised. He’s previously claimed that Giga Watt raised $1 from private investors ahead of its ICO which launched in June 2017. With a lawsuit pending and investors up in arms, Carlson’s latest mining venture is also now in tatters.
Do you think investors should be entitled to compensation for ICOs whose projects are held up? Let us know in the comments section below.
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