Lawsuit seeks freezing of Tezos Foundation assets
A fourth Tezos lawsuit filed in the United States has called on Californian courts to freeze an estimated $1 billion (CHF990 million) of investor assets sitting in a Swiss-based foundation.
Law firm Block & Leviton argues that the recent departure of a Tezos Foundation director and the apparent replacement of the entity’s auditor gives weight to its demand for funds, derived from an initial public offering (ICO) in July, to be frozen.
“The situation regarding the ICO proceeds has deteriorated further, making irreparable looting an imminent prospect,” court filings claim. “Without immediate judicial intervention, Defendants may completely consume the illegally obtained ICO proceeds, leaving Plaintiff and the Class with no remedy.”
The filings argue that California courts would have the jurisdictional power to freeze assets held by the Swiss-based foundation because the ICO fundraiser was “governed By Federal and California law”.
Along with the injunction demanding that assets are frozen, Block & Leviton has filed a class action lawsuit, alleging the ICO represented an “unqualified and unregistered” sale of “securities”.
Tezos Foundation President Johann Gevers is named in the lawsuit, along with two other foundation directors, plus Kathleen and Arthur Breitman, founders of the Tezos project, their company Dynamic Ledger Solutions and venture capitalist Tim Draper, a large investor in Tezos.
It also names Bitcoin Suisse, a Swiss crypto financial services firm that recently revealed it has the power to block Tezos Foundation transactions. Bitcoin Suisse founder Niklas Nikolajsen is also named in the lawsuit.
Trouble with Tezos
The Tezos project has been thrown into turmoil since a row between the Gevers and the Breitmans went public in October. Gevers denies allegations that he attempted to fake the real value of a bonus and has in turn accused the Breitmans of conducting a smear campaign against him.
In the meantime, investors and grassroots Tezos supporters have expressed annoyance that the project has become eclipsed by the bitter personal dispute. A group known as the Tezos Community has attracted more than 1,000 signatures to an online petitionExternal link calling for the removal of Gevers.
Tezos Community describes itself as an informal network of Tezos supporters. The person who set up the community, says he has no formal affiliation with the Breitmans, or DLS – and neither is he in their pay.
The petition has been signed by Olaf Carlson-Wee, founder of the US Polychain Capital hedge fund that has invested heavily in Tezos. He told swissinfo.ch that he was motivated to add his signature out of frustration that funds are not moving out of the foundation towards developers of the protocol.
“By far the most important issue is that the Tezos Foundation has not been efficiently allocating resources and capital to developing the Tezos infrastructure,” he said during a telephone interview. “In my opinion, there has been an absurdly slow deployment of capital. It should have been allocated months ago.”
In August, the foundation statedExternal link: “We are extremely pleased to announce a commitment of $50 million in funding to companies looking to build on the Tezos platform. The innovation and growth of the ecosystem is the top priority of the Tezos Foundation.”
In SeptemberExternal link, the foundation listed a number of measures it was taking to meet that target. Repeated attempts by swissinfo.ch to get an update on those statements and to determine the size of funds that have actually been allocated to development projects have not been answered by the foundation.
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