(Bloomberg) -- The EOS cryptocurrency surged about 15% on Wednesday amid developments seen as positive for the token’s community.
EOS, just inside the top-50 tokens by market capitalization according to data provider CoinGecko, far outperformed most other major cryptocurrencies, with Bitcoin down 0.8% as of 6:35 a.m. in New York. The gain was spurred by a legal ruling and an expected network upgrade.
A court in New York nixed a proposed $27.5 million settlement by Blockchain-technology developer Block.one over allegations that the firm’s initial offering of EOS coins several years ago should have been registered as a securities sale.
The ruling is “recognizing the needs of EOS token holders, who the judge ruled were not adequately represented in the proposed settlement,” said Hayden Hughes, chief executive officer of social-trading platform Alpha Impact. Meanwhile “traders are rejoicing about the network upgrade expected on the EOS blockchain next month,” he said.
Block.One didn’t immediately respond to a request for comment.
The EOS community is planning to fork its chain and cut ties with Block.One, which is fueling inflows into the token, according to Yacine Terai, founder of Web3 consultancy firm StartupToken.
Read more: Block.one’s $27.5 Million Deal With Crypto Investors Nixed
Block.one, whose longtime backers include Peter Thiel, Alan Howard and Louis Bacon, launched an initial coin offering for EOS over 11 months in 2017 and 2018 that raised more than $4 billion.
But the US Securities and Exchange Commission fined the software firm $24 million in 2019 for failing to register the ICO, and token holders sued Block.one in 2020, calling the sale a “fraudulent scheme” and alleging that the company made false and misleading statements about EOS, “which artificially inflated the prices for the EOS securities and damaged unsuspecting investors.”
Read more: Biggest Crypto Coin Sale Fueled by ‘Pump’ Scheme, Research Says
Also, Tezos’s XTZ -- No. 41 in market cap among tokens according to CoinGecko -- advanced 2.2% Wednesday.
“Tezos and EOS were launched at similar times, and are seen to be related among traders,” Hughes said. “The EOS price action has caused some attention to shift to XTZ,” and Alpha Impact traders have been layering into XTZ on shorter time frames amid an increase in trading volume overall.”
©2022 Bloomberg L.P.