The lawsuit, filed August 4, 2026, alleges that defendants systematically sold Lunai shares without borrowing the underlying securities, a violation of Regulation SHO. According to the complaint, the fraudulent activity occurred between November 2025 and May 2026. One cited example from March 17, 2026, shows a trading volume of 554 million shares, roughly 15.3 times the company’s total issued shares, on a day when market data indicated zero shares were available for borrowing.

Jacob Frenkel, co-lead counsel at Dickinson Wright PLLC, described the scale of the alleged fraud as staggering. The company is pursuing claims under the federal RICO statute, seeking treble damages, alongside allegations of securities fraud, market manipulation, and tortious interference. CEO David Weinstein stated that forensic analysis of trading data is ongoing, and the company intends to add further participants to the suit as investigations progress. While the allegations remain to be proven in court, the legal action highlights a push for accountability regarding institutional trading practices that the company asserts devastated shareholder value.