Tezos Founders Hit with Fourth US Lawsuit, Sued for Securities Fraud

For the fourth time in less than two months, a fresh lawsuit has been filed against the founders and promoters of the Tezos project.

Pursued in the US Northern ‎District Court in California, the suit calls for a temporary restraining order to freeze the $232 million raised in the ICO, which has grown now to more $1 billion, the plaintiff Bruce MacDonald claims.

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The filing names the husband-and-wife founders, Arthur and Kathleen Breitman, as well as the operators of the Tezos Foundation and Dynamic Ledger Solutions – the Delaware-based company that holds Tezos's intellectual property – as defendants. Further, it accuses them of fraudulently marketing the sale of their tokens 'Tezzies' as charitable contributions in order to avoid governmental and private scrutiny.

It continues:

"In sum, Defendants capitalized on the recent enthusiasm for Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term technology and Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term to raise funds through the ICO, illegally sold unqualified and unregistered securities, used a Swiss-based entity in an unsuccessful attempt to evade U.S. securities laws, and are now admittedly engaged in the conversion, selling, and possible dissipation of the proceeds that they collected from the Class through their unregistered offering."

The named defendants did not immediately respond to last week’s filing, but in previous cases they have denied any wrongdoing and have signaled that they will aggressively fight back against such lawsuits.

The new complaint echoes and expands upon allegations laid out in the previous three lawsuits filed in October and November. The big question hanging over the Tezos lawsuits is whether its record-breaking ICO violated US securities laws, which require fundraisers to register with the nation’s regulators before they can sell securities to the public.

Amid the showdown with the United States authorities, the embattled founders of the Tezos project have made a request to the Swiss-based association that controls its proceeds to cover their legal costs after having been rocked by several lawsuits.

Tezos’s troubles became public after founders Kathleen and Arthur Breitman asked the head of the foundation, Johann Gevers, to resign from its board.

We reported on the spat last week as Guido Schmitz-Krummacher, one of the three board members of the foundation, resigned.