Tezos Foundation, one of the highest profile cryptocurrency projects in Switzerland, is under fire from both insiders and outsiders over allegations of mismanagement and false marketing, forcing its president to resign.
Currently, the Tezos Foundation which raised more than $232 million in an ICO, is engaged in a round of lawsuits. In California court, a group of investors is claiming that the businessmen behind the ICO misleadingly marketed the “Tezzie” tokens’ purchase as part of a charitable contribution, which can leave investors with nothing in the case the project fails.
Last month, the Chairman of SEC (Securities and Exchange Commission) Jay Clayton said that ICOs will face scrutiny because the market is probably full of fraud.
A Boston lawyer who represents some of the plaintiffs, Joel Fleming stated that the Tezos lawsuit should give Swiss and other foreign enthusiasts and entrepreneurs pause if they want to try raising funds from U.S. investors or for a U.S. operation using an ICO structure that doesn’t comply with the Securities Act’ registration requirements.
$1 Billion Stakes?
The Tezos project’s stakes have risen to over $1 billion, the plaintiffs allege, due to the surging of Bitcoin and Ether tokens’ value which was used to invest in the ICO in July.
Last year, the Swiss regulator who is responsible for overseeing foundations examined Tezos and demanded it to add a board member in order to reinforce the foundation’s independence. On February 22, Gevers stepped down as the president of the Tezos Foundation and 5 days later, a brand new board was appointed.
Oliver Bussmann worked with Gevers to establish Crypto Valley, recognized that the Tezos dispute had a negative impact. But he admitted he is glad that with Gevers’s resignation and a new board, Tezos seems to have solved their dead-end situation and can finally move forward.”
Swiss ICO’s proper guidelines
This lawsuit comes while the Swiss financial regulator Finma tries to control some of the government’s enthusiasm for digital currencies. In February, Finma issued guidelines to remind investors money-laundering rules have to be applied to Swiss ICOs. Further, the regulator shut down cryptocurrency provider E-Coin last September for accepting deposits without a banking license and then started investigations into several ICOs for possible fraud.