Swiss crypto fundraiser shells out $25M to end the lawsuit

Swiss crypto fundraiser shells out $25M to end the lawsuit

By Benson Toti - min read

The court battle over the Tezos ICO has ended in the Tezos Foundation agreeing to pay $25 million to participants who lost money and their lawyers

A US court battle, over a cryptocurrency fundraiser that has spanned over the last three years, has finished with a Swiss foundation paying $25 million to participants who lost money, as well as their lawyers.

The legal action followed a Reuters investigation in October 2017. It outlined a bitter rivalry between the founders of the Tezos cryptocurrency project, Arthur and Kathleen Breitman, and the then-president of the Tezos Foundation, Johann Gevers, that threatened to derail the blockchain venture.

The foundation, which is based in the town of Zug, was in charge of the fundraiser. It raised $232 million in just 13 days in the midst of a cryptocurrency buying frenzy back in 2017.

The lawsuits claimed that the Tezos online offering was an unregistered securities sale. It was one of the largest initial coin offerings (ICO) to date. Due to the settlement, the federal court did not rule on the matter.

The settlement was initially proposed in the US District Court in San Francisco last March. It received final approval by a federal judge on Friday.

The Tezos Foundation agreed to pay the $25 million in full, and the feud between the founders and the foundation’s president was eventually resolved. The entity has continued to promote technology from Tezos and its official website states that its assets have grown to approximately $635 million.

According to a court order issued by the judge, the plaintiff’s attorneys will receive more than $8.5 million in fees and expenses.

According to a Reuters report, the source of the rivalry stemmed from the Breitman’s desire to oust the head of the foundation. While the foundation is supposed to be an independent entity under Swiss law, the Breitmans wanted to play a more “substantial role” in a new structure that would limit the foundation’s responsibilities.

This was expressed in a 46-page letter on Sunday that an attorney for the Breitmans sent to the two other members of the foundation’s board. It also called for Gevers’ prompt removal, accusing him of “self-dealing, self-promotion, and conflicts of interest”.

Gevers refused to step down, informing Reuters that this is a technique that has been used to intimidate others in the past.

“As Arthur has done to others before me, this is an attempted character assassination. It’s a long laundry list of misleading statements and outright lies.”

Gevers also maintained that the other two board members “are attempting an illegal coup”.