Investors in a private cryptocurrency firm brought a class action securities lawsuit against the firm itself, Latium Network, Inc. (Latium) and individually against Latium’s founder and CEO David Johnson and co-founder and chief commercial officer Matthew Carden. The lawsuit alleges that the defendants are subject to strict liability for violating Section 5 of the Securities Act of 1933 by offering and selling unregistered securities in the form of LatiumX tokens. According to the complaint, filed in federal court in Newark last week, the defendants attempted to represent the $17 million Latium initial coin offering (ICO) as a sale of “utility-based tokens,” while in fact the ICO was an offer and sale of securities subject to registration requirements of the federal securities laws because the defendants claimed that the value of the LatiumX tokens would increase after the launch of the new cryptocurrency platform.[1]

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