Things have gone from bad to worse as far as the Tezos ICO is concerned. After facing a major class-action lawsuit already, a second lawsuit has now been filed. There are evidently a lot of people who aren’t too happy with how this project is being run. It is apparent this situation will only get worse as time progresses.
More Problems for the Tezos ICO
There have been a lot of issues with the Tezos ICO ever since this project raised US$232 million in very little time. Raising a lot of money does not necessarily make for a solid project, a lesson the Tezos founders are certainly learning the hard way. Those founders are facing not just one, but two class-action lawsuits right now. Investors are quickly turning their backs on this project and hoping to get some of their money back in the process.
The latest lawsuit was filed earlier this week and made public on Wednesday. The plaintiffs are going after the co-founders of Tezos, Dynamic Ledger Solutions Inc., and the Tezos Foundation all at once. Since none of these entities were on the same page when it came to the distribution and trading of the Tezos token, it was only a matter of time until this powder keg exploded. With no possible resolution in sight, taking the matter to court was the only viable option.
Given that we have had two lawsuits filed against Tezos in less than a month, it will be pretty interesting to see how things play out from here. This initial coin offering has suffered from myriad issues, not the least of which is its failure to have delivered on most of its initial promises. With the tokens still unavailable to investors and impossible to trade, the team collected US$232 million with nothing to show for it. It is a very messy situation that needs addressing, but a resolution will not be in place anytime soon.
The way things stand right now, it may take up to three years before the Tezos Foundation purchases Dynamic Ledger Solutions and the project’s source code. This long “grace period” was not properly communicated to investors in the ICO, and it could very well be the undoing of the entire Tezos project in the coming months. It is certainly true that such a vital piece of information should have been disclosed to investors.
As one would expect, the plaintiffs in this second lawsuit not only want their money back but are also seeking damages. No specific amounts have been made public at this point in time, but rest assured it will not be a low-ball figure by any means. “False representation and violation of federal and state securities laws” may very well come back to haunt Tezos. It is a very ambitious project, but there are so many irregularities that one almost starts to think this ICO should never have happened in the first place.
It will be interesting to see how all of this plays out for Tezos and for those who invested in its ICO. After all, the investors are the real victims of this incompetence and misinformation. It is doubtful anyone would get their money back without a lawsuit, though, as the Tezos team isn’t obligated to refund investors whatsoever. Rest assured this particular ICO is setting a very interesting and potentially dangerous precedent for other initial coin offerings. A lot of projects have yet to deliver on their initial promises, and investors’ patience is running out very quickly.