The game is afoot as far as the Tezos ICO is concerned. Over the past few weeks, we have seen multiple cracks in the facade of this project. Making things worse is the class-action lawsuit underway in California right now. It is evident the organizers of this project have a lot on their plate right now. Being one of the largest ICOs in history isn’t necessarily a title anyone wants to carry right now.
Tezos Class-action Lawsuit is Problematic
We have reported that the Tezos ICO has been under official investigation for quite some time now. These past three weeks have spelled disaster for this ICO, which raised US$232 million in a matter of days. Money alone has never been known to prevent people from bickering, though. An ongoing issue between the project’s founders and the individual running the Swiss Foundation has caused a lot of friction already.
To make matters worse, there is now an official class action lawsuit involving Tezos. It is only to be expected that some investors are growing concerned over how things are evolving as far as this project is concerned. The lawsuit itself claims the Tezos organizers defrauded participants and violated US securities laws. Given the recent SEC scrutiny involving ICOs as of late, the latter allegation may prove to be a big problem, to say the very least.
One of the main causes of concern is the fact that no tokens have been issued so far. The dispute with the Swiss Foundation’s operator has delayed the issuance of tokens far beyond what most people had expected. Right now, it seems likely these tokens will not be made available for trading until next January or even later. It’s a very tense situation that needs to be resolved sooner rather than later, although that is much easier said than done.
At the same time, the official Tezos ICO guidelines stipulate that users are not officially entitled to tokens in the first place. At the time, investors were warned that they might be making donations rather than an actual investment. If that is the outcome of this ICO, Tezos may go down as one of the largest “legitimate” scams in the history of ICOs. It is evident a lot of people ignored this warning and contributed money regardless.
It is certainly possible this lawsuit will not yield any substantial results whatsoever. The defense attorney is convinced this lawsuit is “without merit” and will be dismissed rather easily. Whether or not that is the case remains to be determined. Finding the guilty party in all of this will be a major problem, to say the very least. This difference in opinion between the creators and the foundation itself have created a hornet’s nest no one wants to get involved with right now.
This is yet another example of why ICOs are more of a risk than buying cryptocurrency outright. Unless tokens are distributed automatically – as most ICOs have done so far – there is no reason to contribute money to any of these projects to begin with. In the case of Tezos, the delays are already well beyond the acceptable limit, to say the very least. A solution needs to be found first and foremost, and someone will have to pay for this unprofessional behavior. Only time will tell how this situation evolves.