Since its $232 million initial coin offering (ICO), the Tezos Foundation has been tied with in a class-action lawsuit from a group of investors, believing in retrospect that the offering was illegal. Tezos has now decided to sweep it under the rug, but not without claiming the project is still entirely legitimate.
On their website, Tezos have declared they have entered into a settlement with their plaintiffs for an undisclosed sum. Should California and federal courts approve, it would put an end to this chapter of Tezos’ legal dramas. “The Tezos Foundation chose to settle all claims because the Tezos Foundation believes it is in the best interest of the Tezos project and community as a whole,” they wrote.
But they don’t want anyone to be confused about what this means. “The Foundation continues to believe the lawsuits were meritless and continues to deny any wrongdoing,” they noted. “However, lawsuits are expensive and time-consuming, and it was decided that the one-time financial cost of a settlement was preferable to the distractions and legal costs associated with continuing to fight in the courts.”
Tezos had that monumental ICO in July, 2017, but immediately had infighting that threatened to scrap the project, leaving its investors out in the cold. Looking for a way to recoup their investment, those investors formed a class-action lawsuit in November, 2017, claiming Tezos had offered an illegal unregistered security.
Not all backers had turned on the project though. In February, 2019, a group of Tezos fanatics who called themselves the Tezos Legion took to Reddit to smear Arman Anvari, the lead plaintiff in the class-action suit. Posts were uncovered revealing Anvari didn’t believe the ICO was for an unregistered security at the time of the sale, making him a poor representative for the case.
All the same, even if Tezos wants to claim the high ground in this settlement, their willingness to pay out millions to their detractors says a lot. With the Securities and Exchange Commission increasingly recognizing many past ICOs to have been for unregistered securities, the project likely recognized that they would stand to lose a lot more had they gone to trial, than whatever millions they’ve promised to pay out now.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.