Arthur and Kathleen Breitman and the Tezos Foundation are being sued by Tezos "contributors."
On August 7, the United States District Court of the Northern District of California denied in part a motion to dismiss a class action against the Tezos Foundation and Dynamic Ledger Solutions (DLS), the company Arthur and Kathleen Breitman operated out of their California home.
Starting in October[1], Tezos investors filed a series of class action lawsuits against the two organizations related to their initial coin offering of "Tezzies," which raised upwards of $230 million. In April, these lawsuits were consolidated[2] into one, with Illinois-based Arman Anvari as lead plaintiff. Anvari "contributed" 250 Ether to the ICO. That class action[3] claims that the:
"Defendants attempted to avoid the reach of the U.S. securities laws by characterizing the Tezos ICO as the solicitation of 'contributions,' or 'donations,' as opposed to the solicitation of investments in securities … Here, the Tezos ICO, and the promise of tokens offered and sold thereby, had all the hallmarks of a securities offering under the Securities Act and was therefore required to be registered with the SEC."
It goes on to claim that since Tezzies are an unregistered security, the plaintiffs' investments should be canceled – and that they should receive damages. That's because:
"Despite the enormous sums raised in the ICO, Defendants have claimed that they have no obligation to provide Tezos tokens to Lead Plaintiff and the Class. Defendants even claim the right to abandon the project at will and without recourse. It is situations exactly like this that the federal securities laws were enacted to prevent."
The foundation has pointed out that this was made explicit in the token offering's "contribution terms."
Lawyers for the defendants moved to
