Tezos gets sued over the $232 Million ICO in July
The Tezos foundation is a Swiss foundation based in Zug. Tezos is a decentralized Blockchain startup that governs itself by establishing an authentic digital commonwealth. Its owners say Tezos primary aim is to make holders of its token take decisions together to administer the Tezos platform and improve it in the long run. Tezos was built with a deep commitment to give stakeholders the power to make protocol decisions. Like Ethereum, Tezos is a smart contract but slightly different in its scaling method. Tezos upgrades its protocol through on-chain governance, rather than hard forks.
TEZOS GETS SUED
U.S.-based Dynamic Ledger solutions (DLS) owns all Tezos-related intellectual property(IP), which includes domain names, logos, all trademark applications associated with Tezos and more. Kathleen and Arthur Breitman are the founders and controllers of Dynamic Ledger Solutions, Inc.(DLS).
Tezos organized its initial coin offering from July 1 to 14 2017. The token sale was a hugely successful event as the startup raised a whopping $232 million worth of Bitcoin and Ethereum.
In a recent development, Silver Miller – a U.S. based law firm, has filed an action class lawsuit in a U.S. District Court in Florida. The lawsuit alleges that the securities sold to U.S residents by Tezos founders, Kathleen and Arthur Breitman – including their company, Dynamic ledger solution – were illegally sold and unregistered securities. The suit read thus :
“Notwithstanding Defendants’ attempts to avoid governmental and private scrutiny, it is clear that the financiers were indeed profit-seeking investors in a security that defendants promoted and conducted an unregistered offering of securities, not a charitable fundraiser.”
Reports have it that the $232 million worth of Bitcoin and Ethereum raised in the Tezos ICO has now appreciated to over $600 million.
It is pertinent to note that this is the second class-action lawsuit against Tezos since reports emerged that there were severe internal conflicts between the founders of Dynamic ledger solutions – the Breitmans – and Johann Gevers, one of the directors of the independently run Tezos foundation.
Tezos foundation oversaw the ICO back in July and maintained control of the $232 million worth of Ethereum and Bitcoin raised during the ICO.
It is not yet clear what may have caused the conflict between the two Tezos heavyweights, but the infighting has led to the project missing its stated release targets and investors in the ICO are now regretting ever contributing to the Tezos project.
LOOK BEFORE YOU LEAP
David Miller – a founding partner of Silver Miller Law firm, said those who use ICOs, to raise funds but do not follow the relevant laws must be held accountable. He further advised investors to carry out proper facts finding and always read between the lines before partaking in ICO’s since the U.S regulators are yet to put in place a clear framework for conducting compliant ICO’s.
Happenings like the Tezos scenario justifies China’s ban on ICO’s. In my candid opinion, I see the ICO ecosystem getting stiffer government regulations soon.