In July, Tezos showed the world how to do an ICO right when they succeeded in raising $232 million USD worth of Bitcoin and Ethereum, a record-breaking figure at the time. That number has since grown to over $400 million, as Bitcoin and Ethereum appreciated in value. Since then the Tim Draper-backed ICO has been wroght with major problems. The futures price of the coin has fallen roughly 75% before it has even officially launched.
The main incident that initiated the decline was a squabble between Tezos’ twin founders, Kathleen and Arthur Breitman, and head of the Swiss custodial Tezos Foundation, Johann Gevers. The Breitmans are currently seeking to have Gevers removed from the Tezos Foundation.
A petition letter describes Gevers as “self-dealing, self-promotion and a conflict of interest.” Gevers confirmed to Reuters that he had no intention of leaving and said that the Breitmans were seeking an illegal coup. He retaliated, saying, “as Arthur has done to others before me, this is attempted character assassination. It’s a long laundry list of misleading statements and outright lies.”
The investors are the ones who will lose due to all the chaos and the sudden, significant loss in value of futures. A rollout is not expected until February 2018, at the earliest. It is not possible for the investors to exit their positions. Additionally, they have nothing to show for their investments until the platform launches and tokens are allocated.
A San Diego law firm is investigating the circumstances in order to file a class-action lawsuit. The aim of the firm would be to fully rescind the investments and return all funds been raised. According to the statement:
“It appears likely that DLS, the Breitmans, and the Foundation have violated US securities laws in conducting the ICO. If the Tezos tokens are ‘securities’ sold to US investors, the law requires the sale to be registered with the SEC. Here, it is clear that the tokens were never registered. In this situation, one of the chief remedies is rescission of the transaction. US investors could get their money back.”
It seems unlikely for Tezos to completely recover from this massive hit. Whether the law firm is right or wrong, such a severe hit to Tezos’ reputation is not likely to bode well for the future of the company or the coin. At the moment, investigations from the private sector and from SEC will certainly be forthcoming.