Tezos Founders Sued for Securities Fraud in Potential Class Action

[bbc.reporter]

I am sorry to bring more bad news for the Tezos investors. But one of its ICO donors, Andrew Baker, has filed a potential class action lawsuit, accusing the Breitmans, pictured below, the Tezos Foundation and others for commiting securities fraud.

Because Tezos considers and clearly expressed that the ICO is a nonrefundable donation, this legal battle will last for years. I reckon the SEC is also monitoring the situation closely, waiting for the right time to attack.



Submitted on Oct. 25 in the San Francisco branch of the Superior Court of California, the lawsuit names multiple defendants, including the Breitmans and Gevers.

Dynamic Ledger Solutions, Inc., a Delaware-based company owned by the Breitmans, the Tezos Foundation, and Strange Brew Strategies, a public relations firm that promoted the project ahead of its ICO, are also named as defendants.

The suit, filed by San Diego-based law firm Taylor-Copeland Law on behalf of plaintiff and Tezos ICO contributor Andrew Baker, alleges that the defendants violated U.S. securities law through the token sale. Specifically, the defendants are being accused of selling unregistered securities, committing securities fraud, false advertising and unfair competition ("by making material misrepresentations and omissions").

Even still, observers like Anderson Kill lawyer Stephen Palley say that the lawsuit could drag on regardless of the long-term fortunes of the Tezos network itself. The allegation that state securities laws (not just federal ones) were violated represents "a significant area of risk for ICO promoters" in general, Palley said.
Palley also suggested that the lawsuit may not be the only one filed in relation to the controversy, speculating that "copycat" litigation could emerge as time goes on.

Read the mess in full https://www.coindesk.com/tezos-founders-sued-securities-fraud-potential-class-action/

[ChinkyEyes]

I am glad I didn't follow the hype surrounding the ICO at the time. My goal was to pick up a few tokens once it hits the exchange, but with all the negative news around it now I think I will pass on Tezos.

Nonetheless this really sucks for the ICO participants. I hope you guys can get your money back.

[cryptohunter]

back to POW then.

[defunctec]

Most people invested in this because of a big name "Tim Draper" investing in this. I remember visiting the website and thinking that if they can't be bothered to pay $50 for a wordpress theme, that they are not worth investing in. The website looked like a joke. I'm not sure how people poured over 200 million into this con.

They deserve to be sued, and to be honest, most of the investors who threw money into this deserved to get swindled. How do you invest 200 million into a company with no product, no development plan, no business plan,  and almost no website?

[bundo]

The legal path becomes final demand, because there is a loss with this ico

But how the future of this project, is fine or really loss

[vuvanle120]

The legal path becomes final demand, because there is a loss with this ico

But how the future of this project, is fine or really loss

This project will be fine once the product is released. Be patient and wait until Q1 of 2018

[leps]

Most people invested in this because of a big name "Tim Draper" investing in this. I remember visiting the website and thinking that if they can't be bothered to pay $50 for a wordpress theme, that they are not worth investing in. The website looked like a joke. I'm not sure how people poured over 200 million into this con.

They deserve to be sued, and to be honest, most of the investors who threw money into this deserved to get swindled. How do you invest 200 million into a company with no product, no development plan, no business plan,  and almost no website?

Well, nowadays people throw money at anything that has ICO written on their website and the more hype around an ICO, the more people jump in. People don't do any research of what or where they are putting money in. I think most of the investors were thinking that the names around this ICO were going to pump this token to the moon. Look at Ethconnect. It's a Bitconnect copy cat and they don't even have a functional website or any kind of support and people are just pouring money into that! Crypto is a booming market and more money is coming in so I guess anyone that want to get rich quick just needs to make an ICO and it's a insta get rich quick scheme without the need of any product but a website.

[Yaunfitda]

This is a classic example of a good ICO in the beginning, however they all changed once large amount of investments comes in. The inner bickering and fighting amount the creator and the one handling the funds is the first sign. $200m is quite huge amount of money, so there's no doubt that it is one factor that really turns the tide. As the saying goes, money is the root of all evil, so I think with greed, this is bound to happened.

[hgmarral]

This is a classic example of a good ICO in the beginning, however they all changed once large amount of investments comes in. The inner bickering and fighting amount the creator and the one handling the funds is the first sign. $200m is quite huge amount of money, so there's no doubt that it is one factor that really turns the tide. As the saying goes, money is the root of all evil, so I think with greed, this is bound to happened.

Yeah it's hard to imagine a business in such an early stage of development needing $200m - I'd imagine that they would have less problems had they decided not to raise as much. The community will be following these developments with great interest as incidences like this can really influence future actions within the ICO community.

[OneUnderBridge]

I predict that these type of actions are going to become more frequent, and to be honest, more of these ventures need to be held accountable for their deceptions. It won't be long until criminal complaints begin to be filed because many of these projects start with theft as a motive. We've been letting them gt away with it for too long.

[Rosewater Foundation]

always Bitcoin, never shitcoin

[treather]

I expect to see for class action suits filed against many icos in the not too distant future. They may claim these monies they collect are contributions but in my opnion they must still answer to the contributors/investors/shareholders. The ICO scene needs major overhaul and must be regulated.

[Immakillya]

Im glad i didn't pour any cents to this project. This project seems fantastic to me at first because they'd collected $200 million at their crowdfunding phase. This project been hyping really great. So cant blame others why they pour their money to this kind of project. But when i found this horrific story, this changed my mind. I feel sorry for the investors though. I wonder what happen to Tim Draper after this. He's been used to hype the project. Anyway, i search google for news and updates regarding to the project and i found this.
https://www.google.com.ph/amp/s/api.cointelegraph.com/amp/v1/news/tezos-ico-class-action-lawsuit-now-official-tim-draper-on-defensive

The behemoth Tezos ICO, once the darling of the ICO world backed by VC icon Tim Draper, is now the subject of at least one major class action lawsuit with potentially more to follow. The threat of class action came some weeks back after infighting at the top of the company went public.

The class action has been filed in district court in California by attorney James Taylor-Copeland on behalf of investors. The suit alleges that Tezos violated US Securities Law by offering securities, while at the same time “misleading” investors regarding the nature of the company.

Tim Draper defended his position writing in his comment to Cointelegraph:

“There was nothing secretive about our purchase of Tezos. We invested for ownership in the company, which at the time was two bright young people and an idea. The sale might not have happened at all! We also participated in the Pre-sale. Most ICO founders earn tokens over time. All tokens we hope to receive that we didn’t buy in the Pre-sale (alongside with all the other investors who participated) will vest over time with the founders’ tokens. I have no intention of selling these tokens because I am a true believer in the Tezos mission: to build a Blockchain on proof of stake and open it up for developers to build and invent on a new and more relevant platform.”

Investors angry

The suit is not the only one in the works. Other firms are also studying and preparing for potential lawsuits, including Florida-based firm Silver Miller. Investors who feel they have been bilked out of funds can contact either firm to be added to the class action. According to the report:

“Taylor-Copeland said the proposed class includes an estimated 30,000 people who bought Tezzies and seeks to allow them to rescind their purchases and other damages. He said the lawsuit may be the first civil action brought over an ICO.”

[Crypington]

I have been following this and I'm not sure the TEzos founders intentionally did anything wrong.  It almost sounds like they were taken advantage of due to their lack of understanding of how to structure the company and retain control of the funds.  They produced a good idea with lots of hype and interest, and someone used that to fill up their account while cutting them out of control.  

It definelty exposed one of the drawbacks of techie people trusting finacial guidance from sharks.

[Psynthax]

Lol fuck this project, i glad i don't invest anything in this one. Please, those scammers should be arrested. How many people are not knowing about the refundable project? This is crazy man. how 200 million will be seized by the government and those investors get nothing. CRYPTERIUM was better than teshit.

[justin86]

Poor tezos investors.. Rule one do not trust any project fully. The hype was incredible, idea of this project worths no more than $100k

[Hamphser]

Most people invested in this because of a big name "Tim Draper" investing in this. I remember visiting the website and thinking that if they can't be bothered to pay $50 for a wordpress theme, that they are not worth investing in. The website looked like a joke. I'm not sure how people poured over 200 million into this con.

They deserve to be sued, and to be honest, most of the investors who threw money into this deserved to get swindled. How do you invest 200 million into a company with no product, no development plan, no business plan,  and almost no website?

This project did pass into my ears and have done some check up and research and on the thing you do said regarding on the site it is definitely true which it is already a red flag for me because if they do really have the budget and funds creating a site which isnt really good do somehow signifies their flaws which would really last if you are really a careful investor and i did really feel such thing not to invest because on those doubts and observations.Going back in the past where ive been scammed on ICO's i have learned so much on that. Those people are really worth to be sued on.

[bbc.reporter]

Most people invested in this because of a big name "Tim Draper" investing in this. I remember visiting the website and thinking that if they can't be bothered to pay $50 for a wordpress theme, that they are not worth investing in. The website looked like a joke. I'm not sure how people poured over 200 million into this con.

They deserve to be sued, and to be honest, most of the investors who threw money into this deserved to get swindled. How do you invest 200 million into a company with no product, no development plan, no business plan,  and almost no website?

I reckon it was the promotions company the Breitmans have hired who was responsible for those paid and hyped press releases with Tim Draper's name. The problem would now be how to prove that Tim Draper really invested in the ICO.

There might also be a strong case for false advertising.

[Spoetnik]

Most people invested in this because of a big name "Tim Draper" investing in this. I remember visiting the website and thinking that if they can't be bothered to pay $50 for a wordpress theme, that they are not worth investing in. The website looked like a joke. I'm not sure how people poured over 200 million into this con.

They deserve to be sued, and to be honest, most of the investors who threw money into this deserved to get swindled. How do you invest 200 million into a company with no product, no development plan, no business plan,  and almost no website?

He is a nobody period.
His hockey cards were worth less than a common back in the day LOL

ICO = Scam idiots.
When you gonna drop the charade and grow the fuck up ?

I hope they get jail time.

PS:
Why are we posting more topics about this ?

OHMYFUCKINGGOD TIE DOMI IS BUYING TEH ICO COINZ !!!

HODL FORVER !!!1111111111111111ONE

[Pixmartz]

I find it strange to Investors who invest in Tezos, does the investor not analyze a project to invest them, is it because their big names believe? Because many possible names of people and companies are mentioned when they are not involved. one example is skyway.