$232m blockchain startup Tezos faces sueballs for alleged investor fraud

Smacked in Florida, California

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Tezos, the blockchain startup that raised $232m in July, has been served with at least two US class-action lawsuits for allegedly defrauding fundraisers as well as breaking rules for offering securities.

According to court documents filed in the Middle District of Florida on Monday, plaintiff Alejandro Gaviria is seeking for himself and other participants in the Tezos initial coin offering (ICO) "compensatory and equitable relief" for "the assets and funds they were fraudulently induced into investing".

Reuters also reported earlier this month that at least one other class-action lawsuit had been filed against Tezos at the California Superior Court in San Francisco.

During the Tezos ICO between July 1 and July 15, participants bought early stake tokens in the blockchain that would theoretically go up in value. Like the California suit, the Florida suit argues that although Tezos marketed its ICO as a round of donations, it should have been treated as sales of securities.

The suit points out that in July, the US Securities and Exchange said (PDF) that tokens sold via ICOs could be considered securities in some cases – meaning they'd have to follow federal securities law.

The suit alleges that the defendants made an unregistered offer and sale of securities (the Tezos tokens). Then, it claims, by offering and selling them, the defendants allegedly "made false and misleading statements of material fact" and "omitted to state material facts".

Alejandro, of Sanford, Florida, claims to have invested about 53.0799 in Ethereum tokens (worth about $17,347.22, according to court documents) when he "logged onto the Tezos website" and "followed the instructions provided".

The startup has also been rocked by a power struggle between Tezos' founders – husband-and-wife duo Arthur and Kathleen Breitman – and the Swiss foundation that managed the ICO.

The Register contacted the Tezos Foundation and a lawyer for the Breitmans for comment. ®

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