Finally, Tezos is free from its ICO lawsuit that has been running for a long period. The lawsuit alleged the Tezos initial coin offering (ICO) to be an unregistered securities sale. The controversial ICO is believed to have raised $232 million in 2017. With the lawsuit finally settled, it comes as a sense of respite to Tezos.
Reports of the settlement
Earlier reports around June this year suggested that Tezos(XTZ) class-action lawsuit from law firm Block & Leviton is likely to conclude in a $25 million settlement around the last week of August. Tezos which was one of the many ICOs offered during the boom came under tight scrutiny from the regulators alleging that its token sale included an illegal offering of securities. The U.S. Securities and Exchange Commission had indeed come down hard on the umpteen 2017 ICOs which led to penalties for violation of security. Distributions to non-U.S. citizens also came under the SEC’s radar. SEC was consistent in its stand that most ICO’s are actually unlicensed security offerings despite resistance from the stakeholders to exempt certain tokens from regulations. Allegations against Tezos Foundation were brought in late 2017, a few months after the ICO was concluded.
How it all added?
In October 2017, Block & Leviton revealed that it will be opening an investigation into the Tezos ICO for securities fraud. By mid-December the same year, the Boston-based law firm that specializes in such cases sued the prime actors in the Tezos ICO. By the time all this happened, Tezos Foundation and Dynamic Ledger solution which was the company created by Tezos co-founder Arthur Breitman was already subjected to two lawsuits. In November 2017, cases against them were additionally filed in California and Florida Federal district courts.
$25 million settlement
As suggested by earlier reports, the Swiss-based Tezos Foundation, as well as the project’s founders, Arthur and Kathleen Breitman, agreed on Friday to pay $25 million in cash to settle the case once in for all. The first round of settlement agreement was drawn in March. The presiding judge of the agreement gave the final validation and sanction closing the matters in hand. What needs to be noted here is that although the shut down of the case and settle it for $25 million could be a sigh of relief, the settlement done no way means that the court has ruled on whether Tezos ICO was an unregistered securities sale or not. Trigon, who is the lead plaintiff, believes that the settlement has worked in favor of both the parties and the court. The plaintiff will be taking a third of the settlement amount which is coming to more than $8.5 million in fees and expenses. The remaining amount will be divided between those who invested in the ICO and have made losses. But for those who either sold it off for profit or staked their XTZ tokens for a fair deal, they will not be allowed to claim damages as they did not suffer repercussions of the sale. Trigon has gone on record to describe the settlement as a great outcome for investors of Tezos.