A California Federal judge has witnessed a class-action lawsuit by investors against Paragon Coin Inc, which raised $70 million through an unregistered ICO in 2017.
Paragon Coin advertised its PRG tokens as a currency for the marijuana industry and hired popular rapper The Game to promote the offer. Back in 2018, the us securities and exchange Commission (SEC) charged Paragon Coin with unregistered sale of tokens that were securities.
This week, judge Jeffrey White partially granted the plaintiffs ‘ Federal claims, but rejected state-level claims filed on behalf of investors located outside of California. Although the lawsuit claims that ParagonCoin promised to issue PRG tokens from its headquarters in California, judge white noted that “the ICO in question was conducted over the Internet.”
“The plaintiffs recognize that all 50 States may have potential participants in a class action, and that the laws governing disputed issues vary by state, resulting in a conflict situation,” the judge added.
The first class action was filed against Paragon Coin in January 2018, when investor Astley Davy stated that the company had not registered the sale of its token with the SEC, and therefore should return the funds to investors. Last fall, it was also reported that Paragon Coin failed to meet the deadline set by the SEC to repay obligations to investors.