The cryptocurrency exchange platform Bitcoin Suisse says it will protect Tezos investors’ money in the face of an acrimonious falling-out between the project’s founders, Arthur and Kathleen Breitman, and the president of the foundation set up to house and spend Tezos funds.This content was published on November 14, 2017 - 16:58
The Zug-based Tezos Foundation sits on top of a stockpile of cryptocurrencies now worth some $500 million (CHF496 million). It is supposed to spend this hoard developing the blockchain-based smart contract system, but its president, Johann Gevers, has been accused of misrepresenting the size of a bonus he wanted to give himself – a charge he denies.
The public spat between the Breitmans and Gevers has sparked intense debate on social media channels. Bitcoin Suisse has broken its silence to reveal that it has the responsibility of counter-signing every transaction that the foundation makes. In other words, the foundation cannot spend a cent unless Bitcoin Suisse agrees.
“The Tezos Foundation put this arrangement into place to protect contributors and the funds contributed towards the project,” Nikolajsen told swissinfo.ch. “If any individual, for example, would try to send crypto assets to the Bahamas, then we as a third party could bring this to the attention of the foundation board and prevent the transaction.”
In its statement, Bitcoin Suisse says it is “currently not aware of any evidence that Contributor funds have been mismanaged, lost or put at risk by the Tezos Foundation or any party involved in the project”.
A “small amount” of the funds has been converted into cash and other investments to hedge against the risk of cryptocurrency volatility, but the vast majority of the fund remains intact, Nikolajsen added.
‘Highly risky proposition’
The foundation’s accounts are currently being audited and a report will be sent to the foundation’s board in the coming weeks. Any decision that the foundation board makes on the affair will be sent to the Swiss Foundation Supervisory Authority and the financial regulator.
Bitcoin Suisse was involved in the Tezos initial coin offering (ICO) earlier this year which raised $232 million in crowd-funded cryptocurrencies in a matter of days. That stockpile has since swelled as the value of cryptocurrencies has soared in recent months.
But any investor now clamouring for a refund in the light of the foundation governance dispute will be disappointed.
“The terms for contribution in the Tezos Crowd Contribution to which each contributor agreed in order to participate […] specified that refunds post-contribution and after the close of crowd contribution would not be possible, due to both regulatory reasons as well as practical reasons,” stated Bitcoin Suisse.
“We made it perfectly clear that contribution towards the project was to be considered a highly risky proposition, even underlining this fact,” it added.
Tezos promises to deliver a self-amending super-version of the ether smart contract system, using the decentralised blockchain. In practical terms, such blockchain systems could be used to cut out third parties and related fees for a variety of financial and legal transactions. According to proponents of the technology, encryption would also protect contracts from alterations and fraud, dispensing with the need to trust that counterparties will play fair.
Just a concept
Investors poured their multiple millions into the Tezos ICO, knowing it was just a concept that had yet to deliver anything concrete. Furthermore, they were told that the tokens they bought (Tezzies) did not represent any shares in the company and that they would not bear dividends.
In essence, either they wanted to be early adopters of a new technology in which they believed or they were betting that Tezzies would increase in value once the technology took off.
But no one investing in Tezos could have foreseen the row that broke out between the Breitmans and Gevers, which went public last month.
The turmoil has already set the project back months. It had been hoped that a first version of Tezos would be ready by the end of the year, but that deadline has been put back to at least February.
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