Tezos legal dispute endangers $400M raised in ICO

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Infighting behind the scenes could spell trouble for tech project Tezos and the $400 million it raised via initial coin offering (ICO).

Tezos is a smart contracts-hosting decentralized platform that plans to take on Distributed server processing system ethereum and build “a new digital commonwealth.” The idea, according to founders Kathleen and Arthur Breitman, is to create governance rules for stakeholders to approve of protocol upgrades that are automatically deployed on the network.

In July, the project initiated an ICO that netted Tezos $232 million—the largest token sale event at the time. Tezos raised a total of 65,703 BTC and 361,122 ETH, which are worth more than $400 million at current trading prices.

The project, however, is in danger of falling apart, Reuters reported. And its investors may have no way of recouping their losses.
The Breitmans are reportedly out to oust Johann Gevers, the head of a Swiss foundation that was set up by the husband-and-wife team to oversee the ICO as well as “promote and develop the Tezos computer network.”

According to the news outlet, a lawyer representing the couple sent a letter to the other members of the foundation’s three-man board threatening to rescind their support if Gevers isn’t removed from his post. Gevers told Reuters he will not step down from an “attempted character assassination,” and accused the Breitmans of “unnecessarily putting the project at risk.”

Gevers said the couple has been “bypassing the foundation’s legal structure and interfering with management and operations,” which resulted in delays in the development and launch of the Tezos network and its digital coins, called “Tezzies.”

And that’s the bottom line: the Tezzies are currently fetching hefty premiums in futures trading, even though they don’t exist—yet. Tezos’ ICO stipulated that “no payment will be made” until the initial Tezos has been rolled out. Once the terms are met, shareholders will receive 8.5% of the contributions they made during the fundraiser, plus a 10% allocation of the tokens in the genesis block, placed in a smart contract that will vest monthly over a period of 48 months, according to the company.

Before the ICO, the team said the Tezos network would be active in mid-November, with a secondary trading happening around the same time. Currently, there is no date set for the Tezo network launch, and with a legal battle brewing, there’s are no guarantees that the ICO participants will get their Tezzies anytime soon.