Founders Spell More Trouble for Tezos, Seek Legal Bailout From ICO Funds

The big question hanging over the Tezos lawsuits is whether its record-breaking ICO violated US securities laws.

Amid a showdown with the United States authorities, the embattled founders of the Tezos project are making an emergency request to the Swiss-based association that controls its proceeds to cover their legal cost after having been rocked by a third lawsuit earlier this week.

People familiar with the matter told Reuters Friday that a schism between the young husband-and-wife founders and the head of Tezos Foundation Johann Gevers may delay, or deny, the couples’ request.

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Tezos’s troubles became public after founders Kathleen and Arthur Breitman asked the head of the Swiss foundation, Johann Gevers, to resign from its board.

Tezos is a cryptocurrency tech project that made headlines by raising $232 million in a high-profile token sale in July. Earlier this week, the project’s founders were hit with a third class-action lawsuit in less than a month.

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A management spat and little progress in developing its product has sent derivatives on Tezos tokens sharply lower as anxious investors unwound bets that the project would be launched before the end of the year. The actual tokens, known as ‘tezzies’, have yet to be created.

A Reuters investigation found that part of the tensions appears to be rooted in part in Tezos’s legal structure which involves the Swiss-based foundation paying to acquire a company controlled by the Breitmans. This led to “a bitter dispute with Johann Gevers, the foundation’s president, over control of the project,” according to the report.

The big question hanging over the Tezos lawsuits is whether its record-breaking ICO violated US securities laws, which require fundraisers to register with the nation’s regulators before they can sell securities to the public.

Finance Magnates reported on the matter Tuesday. The latest suit seeks to “recover bitcoin and ethereum contributed to the Tezos ICO, along with any corresponding appreciation in value of those invested assets, or the equivalent in monetary damages or restitution” for its plaintiffs.

 

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