A US federal court has ruled that the class action lawsuit against the founders of HelbizCoin can proceed, nearly three years after it was initially filed. The lawsuit was first initiated in 2020 against Helbiz, its CEO Salvatore Palella, and partner s. An amended complaint was submitted in March 2022.
The case centers around HelBiz, an Italian e-scooter sharing company that conducted an ICO (Initial Coin Offering) in 2018, raising $38.6 million and issuing ERC-20 tokens. Anthony Di Iorio, one of the co-founders of Ethereum, was involved in the project. Approximately 20,000 investors have accused HelbizCoin of being a pump-and-dump scheme, alleging that the company made false statements and promises to entice people to purchase its tokens while keeping most of the ICO funds for itself.
On September 1, the US District Court for the Southern District of New York delivered a mixed ruling on the class action lawsuit. The court partially granted the motion to dismiss and partially denied it. Some defenders, including Paysafe, Skrill, Decentral, and Alpha bit , were cleared of all claims, with the court finding that Paysafe and Alphabit lacked personal jurisdiction. Additionally, several claims against the remaining defenders, such as breach of contract, tortious interference, and certain securities claims, were dismissed .
However, Judge Louis Stanton also ruled that the plaintiffs had adequately presented their allegations of fraud, price fixing, violations of securities laws, commodity laws, RICO (Racketeer Influenced and Corrupt Organizations) laws, and unjust enrich ment against specific defendants. Attorney Michael Kanovitz, representing the investors, pointed out that the case establishes that ERC-20 tokens are considered securities under federal law.
The lawsuit initially faced dismissal in January 2021, citing a 2010 Supreme Court precedent limiting the extraterritorial reach of federal securities laws. However, the case was reopened in October 2021 when the US Court of Appeals for the Second Circuit determined that the lower court judge had erred in the decision. In March 2022, an amended complaint was filed.
Kanovitz revealed that the complaint includes diagrams employing the Ethereum ledger to demonstrate fraudulent transactions in the ICO. It also provides evidence of multiple "genesis wallets" allocated to initial Ethereum investors like Mr. Di Iorio. These genesis wallets were ed in the ICO publicly by Di Iorio, aligning with the overall case. The complaint allegations that Di Iorio made false and misleading statements about the HelbizCoin ICO in Bitcoin Magazine. However, the ruling found the evidence insufficient to assert that he made false or misleading statements.
In sum, this ruling allows the class action lawsuit against the founders of HelbizCoin to proceed, affirming that ERC-20 tokens are considered securities under federal law.
