Class Action Law Suit is Aimed at Tezos Founders

by Cathy Thompson

In less than three weeks, a second class action law suit has been filed against the founders of the Tezos project.

Filed in U.S. District Court in Florida, Tezos founders, Arthur and Kathleen Breitman, have been charged with selling unregistered securities. In July, they raised $232 million in their initial coin offering (ICO). How they did it is in violation of federal and state laws.

The filing lists Arthur and Kathleen Breitman, the Tezos Foundation, plus Dynamic Ledger Solutions, a Delaware-based company that retains Tezo’s intellectual property, as defendants. The lawsuit also accuses the Breitmans of misleadingly and fraudulently marketing the “Tezzies” as altruistic contributions. They took “tens of millions of dollars” for their own use.

“Notwithstanding the defendants' attempts to avoid governmental and private scrutiny, it is clear that the financiers were indeed profit-seeking investors in a security and that Defendants promoted and conducted an unregistered offering of securities, not a charitable fundraiser," states the filing.

The filing continues to say:

"[D]ue to the many misrepresentations, factual omissions and unlawful activities engaged in by the defendants – it appears [participants in the ICO] cannot, and potentially will not, see any return on their investments."

As of Wednesday, attorneys for the Breitmans have not answered requests for comments. As in similar cases the Breitman have refused to claim any wrongdoing and have motioned that they will aggressively fight the lawsuits.

The news report is the latest development in the ongoing disagreement over the Tezos project. News about the dealings in this project was brought forward for public view earlier this month when the Breitmans accused Johan Gevers, the head of the Tezos Foundation, of self-dealing. (The Tezos Foundation was formed to support development of the project.) In turn, Gevers accused the Breitmans of seeking to take over the non-profit foundation.

David Silver, a partner at SilverMiller in South Florida, filed a new complaint alleging more charges against the Breitmans. He enlarges accusations filed in a separate class action suit in California on October 25. This filing came just days after the Breitmans and Gevers went acquisitions went public.