Business 23 April 2018

Gerald Fenech

Tezos co-founder hit with ban, $2,000 fine from FINRA

Arthur Breitman, the controversial co-founder of Tezos tech project, is once again in the headlines following reports that he was fined by the Financial Industry Regulatory Authority (FINRA) to the tune of $20,000. This occurred due to the fact that Breitman made a number of false statements regarding his venture whilst he was still an employee of Morgan Stanley. Securities professionals that are registered with the FINRA are required to explain any activity that is carried out for profit that has nothing to do with their employment if this activity results in some sort of compensation.

Breitman, a French citizen registered with FINRA, reportedly started working in the Tezos project between 2014 and 2015, while he’s still employed at Morgan Stanley. A Reuters report published a business plan written by Breitman that listed him as chief executive of the company—which its executives expected to make $20 billion in over 15 years. Additionally, Breitman wrote two papers under the pseudonym L.M. Goodman, an indication that he wanted to hide his connection with the company.

It appears, however, that the Wall Street regulator has already reached an agreement with Breitman over that incident. In its settlement agreement, FINRA said: “Breitman did not notify Morgan Stanley at any time that he was engaging in these outside business activities,” He was fined $20,000 and was also banned from entering into any brokerage dealings for a period of two years.

Breitman did not specifically admit or deny the charges, and his lawyer Sarah Lightdale said, “The settlement with FINRA is unrelated to and has no impact on the launch of the Tezos network. Arthur cooperated fully with FINRA at all times and Arthur is pleased to put this personal matter behind him.”

This is not the first time that Tezos has been involved in conflicts and controversy. The Tezos Foundation allegedly raised $232 million in July 2017 to build a blockchain network for smart contracts. However, none of the cryptocurrency has been delivered as yet due to problems with legal issues and internal conflict at board level. According to reports, there were substantial conflicts between Kathleen and Arthur Breitman and the president of the Tezos Foundation, Johann Gevers, who was also accused of attempting to embezzle funds and hindering the progress of the coin. There were also a number of class action lawsuits brought against the Tezos Foundation from investors as well as accusations of securities fraud and persistent rumours that the SEC would be launching an investigation into the foundation’s operations.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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