Tezos ICO Is Officially Under Investigation

A few days ago, it became painfully obvious that the Tezos ICO was going through a very rough patch. With an internal power struggle taking place, it is evident things will not be settled anytime soon. To make matters worse, there is now an official investigation underway against Tezos on behalf of various ICO investors. Things are escalating quickly for a company with plenty of ambition.

Tezos Woes Grow Worse Over Time

In an odd way, it seemed always a matter of time before we would see the first official investigation and potential court case against a major cryptocurrency ICO. Unfortunately for everyone who invested in Tezos, this investigation will affect them in one way or another. Block & Leviton LLP, a Boston-based law firm, confirms there is an official investigation on behalf of Tezos ICO investors. That doesn’t bode all that well for this ambitious project which was endorsed by Tim Draper.

After raising US$230 million in funding through its ICO, things started to unravel for Tezos. Not only is the trading of tokens delayed indefinitely, there is also a beef between the project’s foundation and the actual founders. It is evident this matter will not be resolved amicably any time soon, which only brings more negative attention to this particular project. With the new investigation underway, things will only heat up even more.

The falling out between Tezos co-founders Arthur and Kathleen Breitman and Tezos Foundation president Johann Gevers is the main reason for the new investigation. Mudslinging between all parties has been going on for some time now, and a lot of ICO investors are understandably growing concerned. Indeed, the project’s success is currently at risk, although it remains to be seen how things will evolve in the coming weeks and months.

Anyone who invested in this ICO and is wondering about their legal rights should get in touch with Block & Leviton LLP as soon as possible. There are two attorneys on the case already, and it seems we may expect some fireworks sooner or later. The investigators are actively looking for whistleblowers or anyone else who may possess damning evidence on this project. Whether or not such details will ever emerge remains highly doubtful, though.

Additionally, this investigation seems to hint that the Tezos ICO violated securities laws and regulations. If that is the case, things will soon go from bad to worse for this project and all its investors. Rest assured this is not the last we will hear about the Tezos investigation, although it remains to be seen what evidence comes to the surface in the coming weeks and months.

All of this further confirms that investing in cryptocurrency ICOs remains a big risk. Sadly, a lot of people don’t conduct due diligence before handing money to complete strangers. In particular, some of the larger projects will face struggles like this one in the months and years to come. After all, projects with the biggest buzz are often the first to be scrutinized. For now, Tezos isn’t in a good place, but things may eventually be resolved in a professional manner.

  • Sam Bacha

    why is there a picture of a black guy pointing to a chart

    • imusicbox

      On the chart is the plane called XTZ, that crashed soon after they raised the biggest ICO sum ever. Greedy pilots…

    • Don’t start with the “black” thing. They always have “white” guys and gals pointing at charts too. Let me help you out. It is a stock photo of a business man presenting in a business meeting. That’s all… nothing more … nothing less… Boy oh Boy oh Boy!

    • Brian Lammas

      I think what is more important is that the image has no relevance to the content of the article whatsoever.

    • tb1981

      Tezos is under investigation by Chris Rock. The photo matches the article, generic as hell.

    • ?Legendary Bruce Lee Roy

      what do you mean what kind of question is that?

    • Its an airline seating chart,he is planning an unscheduled surprise party for the pilots

    • Mono H

      A stock photo, dude. Relax.

  • rpolevoi

    I doubt that anyone who bought this token even bothered paying attention, but the whole scam was to raise money through an ICO using the now-standard “Swiss-based non-profit foundation” which would then use the proceeds to immediately buy out the founders’ rights in the underlying tech. The founders hoped to be able to sell their blockchain tech for many, many times the highest price they had been offered through any other path. In short, by wrapping the sale of some probably-useful tech into an ICO, the founders expected to turn the whole thing into a circus where people bought the chance to profit from the coins in the current hysteria, rather than buying tech they could not possibly understand or place any value on.

  • bk

    I’m an investor, this is what I sent Block and Leviton:

    “Reading your case description, one could naievely think that $1000 invested into tezos is now worth $400. Really, those bitmex futures were predictions for what tezzies would trade at when the mainnet was released, with a clause that if they were not trading by Dec 28, the ICO price would be used. Before news of the delay to feb, they were trading at significantly above ICO price, after the news, they dropped, because that contract no longer tracked their value. Hitbtc sells IOUs which track value much better because they are redeemable for actual tezzies in the future, and these are still significantly above ICO cost in BTC.

    I’m happy with my investment. Fuck off and find another ambulance to chase; there’s no injury here, but you could cause one if you waste this project’s time with litigation.”

    Every so often, you find someone who thinks that investing in crypto needs regulation to protect investors from scammers, really, regulation is weaponry for hyenas like this firm and governments, that pose large threats to these projects (and their investors by extension). The source of the original struggle (a foundation board member) is most likely a consequence of the need to structure the ICO as a donation to a foundation to protect themselves from these hyenas to begin with.

    Let the creators create, and let the market decide it’s value.

    • Marius-K

      Sorry, but value is driven by usage. (supply and demand) regulation protects people from fraud. The same area that protects you and your family from fraud, or the laws that protect you and your family from harm. The same laws that allow projects like Blockchain and cryptocurrencies to operate. You think if you lived in a place like North Korea or others, that you can create projects like bitcoin. They would not just shut you down and through you in jail but take everything you own. You should be happy to live in an area where you can make your own choices. Without yourself having to fight for your life. You live in freedom to think, choices on how you live.

      Fraud is when someone stole money under disguise of something else, by selling fake goods. Embezzlement is not only in the financial space but in many industries.

      tezos better be legitimate and have a project to release.

      Ambulance to chase ? Your mind is in space.

      This isn’t about investment losses or gains from legitimate projects (thousands of them) and/or companies that work hard to deliver what they made.

      This is about technologies trying to use willing cryto_currency investors for their own gain. (The same people that supported Bitcoin, Ethereum and others) This better not be the case with Tezos, they better be holding funds in trust.

      Fact is fact.

      • bk

        Dude, you can join their alphanet. They have a github. It is clearly real.

        If they are real, but some people working within a legal framework falsely call them a fraud and damage the project, then it is the law that has enabled fraudulent actors to harm me.

      • bk

        “The same area that protects you and your family from fraud, or the laws that protect you and your family from harm. The same laws that allow projects like Blockchain and cryptocurrencies to operate. You think if you lived in a place like North Korea or others, that you can create projects like bitcoin. They would not just shut you down and through you in jail but take everything you own. You should be happy to live in an area where you can make your own choices. Without yourself having to fight for your life. You live in freedom to think, choices on how you live.”

        Blockchain doesn’t need laws to exist. The powerful thing about it is that not even laws can make it not exist. I can make my own choices anywhere, it’s just that there’s some places where assholes have more power to interfere with those choices, in the vast majority of cases, legally. Bitcoin could have been made in North Korea if they had internet access, and it’s not the absence of laws that prevent them from having internet; it’s the presence of them. I live in Australia. When an Australian claimed to have created bitcoin, his house was raided and computers stolen. Freedom needs no basis in law; law is Government legitimized theft of freedom, that is often wielded in it’s own interests, or the interests of unscrupulous opportunists, over the interests of citizens.

    • TunaFish

      What Tezos is doing is committing fraud by trying to wrestle control away from the foundation which holds all the ICO money without actually delivering anything. That is not how it’s supposed to work. You give a couple a quarter billion dollars and they don’t deliver anything within the stated timeline, of course you will see litigation by investors. This is just the start. I know more investors will join hands to file a class action against Tezos. Money doesn’t grow on trees you know.

      • bk

        DLS is the company that is developing tezos. They need funds from the foundation to hire quality developers to build the project, but claim that the foundation is making it hard to spend it, and that one of the foundation members was giving himself secret bonuses. The problem isn’t that the quarter billion was given to the couple, but to the foundation that’s not giving it to the couple.

    • Richard Baratheon

      Amen brother. I made a donation because I want breitman to make Tezos aka Wall St. coin.

  • Marius-K

    Tezos really needs to get their act together before they get a class action law suit and have regulators seeking criminal charges on anyone trying to commit theft. Or cash out the proceeds from the ICO.

    The investment of issuing Tezies clearly outlines their purpose of launching their project and for the purpose of Tezos Blockchain technology.

    The founders are not the owners of all Tezies, and anything less then meeting the expectation of the investors into the Blockchain Tezos would deem it fraud.

    It does not matter what kind of disclaimer or warning they give, these are normal warnings and are clearly not that relevant. They can argue all they want, no disclaimer will safeguard you from fraud.

    Tezos better go up and running because theft of this size can land you into the most wanted list. And you cannot hid left like in the 1980s. Sorry, not possible now and especially at this size.

    • bk

      To go through the contribution process, you had to agree that your contribution was a donation. It’s inaccurate hyperbole to turn around and call it theft, when there’s really nothing to suggest that they don’t have the full intention of following through with their vision.

      • Marius-K

        Sorry, but the Blockchain space and concept of their project was an Investment for Tezies, we received Tezies for our money. (they can mask or call it for what ever they want.) They have not released the Tezies to be traded, the anonymous public had put their funds in and received a product. The product is either real or fake. Fraud or real.

        Again, I don’t think you are familiar with Investment protection and securities regulation. It is not the same as a business arrangement or something you buy and sell.

        They sold Tezies for a tradable token; they cannot use the funds for personal purposes. Unless they are their own investor and use their own Tezies. But who is going to use a Tezies if it’s fraud.

        If they use the funds other than holding against the Issuance and readability or release of Tezies, I can basically guarantee you they will become one of the most wanted people on the planet. (Embezzlement)

        Let’s just say they better release what they anticipated to release. They better have a team of programmers, cryptographers with a business mode and need to be searching for a concept.

        • TunaFish

          What concerns me is that in order the scout the law, they might just release the coins for trading but never deliver on the project. Creating blockchain coins are easy and even a kid can do it. People paid for the project, not to have another shitcoin in their bag.

          • bk

            Except that wouldn’t really be scouting the law, that would be compliance with it. Getting the law involved in that case would be extremely detrimental to investors.

          • Marius-K

            Depends on how it’s used. Meaning, how do we know that someone is using the funds appropriately. Or, are they cashing the bitcoins and ethereum received.

            All of this is supposed to be about a crypto coin called Tezos that people think is new and has potential.

            Where is the coin ?

            They can at least state a date to release it …

            Let us use the coin.

          • TunaFish

            Scouting the law means you comply with it in it’s wording but not in it’s spirit. Let’s face it, $250m (worth $400m now) wasn’t invested in this project so that people could have another useless shitcoin to trade with. They paid the money to get a better version of Ethereum. If that is not delivered, it is tantamount to fraud but the law will probably allow them to get away scott free as long as they release the coins which of course will have no buyers in the open market.

          • bk

            Ah, I agree in that case. It would really piss me off if they would prefer to deliver a quality project but end up delivering something crap because it’s the only way to avoid getting reamed by lawyers.

          • Marius-K

            To be honest, if they really had a legitimate project or not; they are better off to just create the coins and release them…. As it stands they have the financial backing to support a coin (400 million) that is basically either cash, bitcoin or ethereum. At worst, the public can use it for other purposes.

            We all paid for the project.

            For their own success, if they truly have a problem and need to solve it, then that would sound normal to spend more time to fix it.

            But they haven’t updated their website nor made any announcements and we haven’t seen it in action.

            They need to solve their issues.

      • TunaFish

        Terms and Conditions of a private entity never hold up in court if they trample all over a person’s rights. You can write anything in your TOS or disclaimer but that doesn’t mean you can get away with taking $250m from people and calling it a donation. I am sorry but the real world doesn’t work like that. Economic offenses have massive consequences in the real world and the Breitmans will bear the full brunt of the law if they don’t deliver.

        • Richard Baratheon

          Arthur Breitman will deliver. Gevers needs to go since he is trying to give himself bonuses.

          • AGDM CR

            I honestly don’t think Breitman have anything. The source code repo is nothing, the guy isn’t even a developer of note. Besides, they should have, for a raise of 250 millio (450 by now), have a team of 25 world class developers.
            As for Gevers giving himself a bonus: I know the guy, worked with him before. I he is a straight shooter. If he take out a ‘bonus’ it’s due to that he announced it before hand. Most of these marketing companies that work with ICO get 2-3-4% of the raise. If Gevers paid things out of pocket and used his network, and if he then take out a small bonus that was agreed upon for work produced, then whats the issue? As I see it, Johann delivered; the Breitmans have not.

          • Richard Baratheon

            Gevers is President of the tezos foundation. Gevers is ceo of a new cryptocurrency. That appears to be a conflict of interest. The ceo of coke cannot participate on Pepsi board of directors.

  • thats why i buy anon coins like EXCL now

    • Sergei G. Koleda

      I think that it is wise to invest in ICOs of companies with the firm background like Doft, which announced $50M ICO being an established trucking company.

  • Peter Roehlen

    An “official” investigation suggests one by the SEC or some other regulatory body. Not one by a private law firm. Otherwise we might as start calling every Google search I do an “official investigation”.

    • AGDM CR

      Ha! My sentiment exactly. It’s someone rocking the boat, probably Breitmans or one of the biggest investors. ‘Official investigation’ my a**.

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