Categories: CryptoNews

Tezos Faces Class-Action Lawsuit in California

The game is afoot as far as the Tezos ICO is concerned. Over the past few weeks, we have seen multiple cracks in the facade of this project. Making things worse is the class-action lawsuit underway in California right now. It is evident the organizers of this project have a lot on their plate right now. Being one of the largest ICOs in history isn’t necessarily a title anyone wants to carry right now.

Tezos Class-action Lawsuit is Problematic

We have reported that the Tezos ICO has been under official investigation for quite some time now. These past three weeks have spelled disaster for this ICO, which raised US$232 million in a matter of days. Money alone has never been known to prevent people from bickering, though. An ongoing issue between the project’s founders and the individual running the Swiss Foundation has caused a lot of friction already.

To make matters worse, there is now an official class action lawsuit involving Tezos. It is only to be expected that some investors are growing concerned over how things are evolving as far as this project is concerned. The lawsuit itself claims the Tezos organizers defrauded participants and violated US securities laws. Given the recent SEC scrutiny involving ICOs as of late, the latter allegation may prove to be a big problem, to say the very least.

One of the main causes of concern is the fact that no tokens have been issued so far. The dispute with the Swiss Foundation’s operator has delayed the issuance of tokens far beyond what most people had expected. Right now, it seems likely these tokens will not be made available for trading until next January or even later. It’s a very tense situation that needs to be resolved sooner rather than later, although that is much easier said than done.

At the same time, the official Tezos ICO guidelines stipulate that users are not officially entitled to tokens in the first place. At the time, investors were warned that they might be making donations rather than an actual investment. If that is the outcome of this ICO, Tezos may go down as one of the largest “legitimate” scams in the history of ICOs. It is evident a lot of people ignored this warning and contributed money regardless.

It is certainly possible this lawsuit will not yield any substantial results whatsoever. The defense attorney is convinced this lawsuit is “without merit” and will be dismissed rather easily. Whether or not that is the case remains to be determined. Finding the guilty party in all of this will be a major problem, to say the very least. This difference in opinion between the creators and the foundation itself have created a hornet’s nest no one wants to get involved with right now.

This is yet another example of why ICOs are more of a risk than buying cryptocurrency outright. Unless tokens are distributed automatically – as most ICOs have done so far – there is no reason to contribute money to any of these projects to begin with. In the case of Tezos, the delays are already well beyond the acceptable limit, to say the very least.  A solution needs to be found first and foremost, and someone will have to pay for this unprofessional behavior. Only time will tell how this situation evolves.

JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

Recent Posts

Law Firm Hired by Bitfinex Confirms Tether Reserves

There are numerous theories regarding the roller coaster market movements of cryptocurrency over the past year. A popular one revolves…

23 mins ago

Top 3 Blockchain Technologies Poised to Save Businesses Time and Money on KYC

The costs of complying with due diligence processes like KYC (Know Your Customer) and AML (anti-money laundering) are rising. With financial…

1 hour ago

Bitcoin Price Watch: Currency Sinks to New Low

At press time, bitcoin has shrunk down to $6,100 – the lowest it’s been in nearly four months. All the…

2 hours ago

TRON Making Moves as Its Independence Day Draws Closer

TRON has been making headlines as its Independence Day draws closer, and its value has been benefiting greatly. The startup, which…

2 hours ago

Nasdaq Successfully Trials Blockchain-Based Margin and Collateral Solution

Nasdaq has successfully completed a proof of concept to increase the efficiency of the use of securities when used to…

3 hours ago

Ever invested in an ICO to later regret it? There is a solution

Research from Tokendata found that 46% of the ICOs launched in 2017 have already collapsed: they failed during the funding…

4 hours ago