Categories: Ethereum

The $232 Million ICO Debacle Continues as Tezos Community Opposes Class Action Lawsuit

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Lawyers for Tezos defendants have argued for a lead descendant to be approved by the Court rather than the plaintiff's lead counsel. } Source: Shutterstock

Tim Draper-endorsed blockchain Tezos is the subject of a consolidated class action lawsuit brought by unsavory individuals. A group of Tezos community members believes the lawsuit is depressing the Tezos price and that the named lead plaintiff, Arman Anvari, does not adequately represent the Tezos community. Anvari has publicly agreed with this sentiment.

Arman Anvari Backs Out As Lead Plaintiff

The list of problems with Anvari as the chief plaintiff in any class action suit against Tezos is long. For one thing, he made multiple death threats against Tezos co-founder Kathleen Breitman. For another, he actively acknowledged in posts revealed by investigative community members that he was violating the terms and conditions of the Tezos suit.

He has requested to be removed from the case. A group calling itself the “Tezos Legion” believes alternative lead plaintiffs are equally bad.

One primary issue with the class action suit is that the terms and conditions of the Tezos ICO specified that European courts should be used. Tezos is based in Switzerland, though it was founded by Americans Arthur and Kathleen Breitman. The blockchain experienced a high degree of difficulty getting off the ground, not launching until June 2018. The Tezos Legion describes the launch as “successful,” and characterizes this as a contrast to most other ICOs funded during the same time.

Delivery of a live, well-functioning network stands in direct opposition to most projects in the blockchain and cryptocurrency space. The Tezos mainnet has functioned well for nearly 5 months. Over 80% of activated tokens are actively baking on a network supported by ~460 bakers in 33 different countries. And there are Tezos developer teams on 5 different continents.

Tezos: Security or Nah?

Another issue with the case filed initially by Anvari is that Tezos found evidence that he continued to purchase Tezos tokens even after filing the suit. Moreover, he openly expressed awareness that the tokens were not securities, which calls into question the suit, which in part alleges that Tezos violated securities laws.

At least 1200 people who bought the Tezos ICO have signed a petition against the class action lawsuit. The majority of users seem happy with a functioning, “self-amending blockchain.” The interesting aspect of Tezos has always been its governance model. Tezos, like Ethereum, sports its own coding language for the development of smart contracts.

Like several potential Ethereum alternatives, Tezos is still in its infancy. An outspoken and sizable group of Tezos community members want to give it time to grow. At present, they diametrically oppose any class action lawsuit.

Tezos Could Have Been Worse

The Tezos price is currently just 7 cents below its ICO offering price of roughly 47 cents. This is far better performance than a number of other ICOs launched at the same time. For example, SONM’s ICO price was roughly 59 cents, but today it’s worth less than 2 cents.

CCN was told by former Tezos class action lawyer David Silver that it doesn’t matter who or how many people are certified to proceed with a class action lawsuit. “It can be one or a million,” he said in a gracious phone call this morning. This is to say that the case can proceed regardless of the community’s feelings. It’s a matter of law, not sentiment. One strategy those opposed to the case might pursue if it continues is to sign on, take their proceeds from any potential settlement, and re-invest them in the blockchain they appear to believe in.

But the Tezos Foundation doesn’t intend to go down without a fight. The nature of the other potential lead plaintiffs will be called into question just like that of Anvari was. As the Tezos Legion notes, other potential lead plaintiffs are in some respects even worse. One, Trigon Trading (owned by Salerno Law), is related to a cult leader . Another is some sort of misogynist entrepreneur.

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