Tezos: The ongoing half-billion dollar saga of the largest ICO/non-ICO ever
Tezos, which raise $232 million in July is being hit with a class action lawsuit out of California.
There was much fanfare and anticipation in April about the Tezos ICO which was targeted for May, and its promise of a revolutionary “self-amending crypto-ledger" with “governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network.” It all sounded great and worked up would-be investors into a frenzy -- some thinking this would be the “Ethereum Killer.”
Then, a matter of days before the scheduled ICO, Tezos announced a delay in the ICO “to get it right” and spent the next 45 days enlisting funding and help from Tim Draper and others to create a Swiss nonprofit organization,The Tezos Foundation -- clearly to get around SEC regulations and avoid being considered an "investment." But all of the early marketing already had prospective investors viewing it as an ICO with huge profit potential.
So when the fundraising launched in July, they were very careful not to call it an "ICO." The fundraiser's terms called the contributions "a non-refundable donation" and not a "speculative investment."
Kathleen Breitman even told Reuters that participating in the Tezos fundraiser was like contributing to a public television station and receiving "a tote bag" in return. She also said of she and husband, Arthur that a year earlier, when the price of bitcoin was lower, “We were like, ‘Hey, we would be lucky if we get 20 million’.”
In the first 14 days of July, they took in "donations" of 66,000 bitcoins and 361,000 Ethers which equated to $232 million. Bitcoin has since more than tripled and Ether has gone up 50% making the holdings of the foundation now over $575 million as of this writing.
Much is at stake as the Breitmans now want to oust the head of the non-profit to get their hooks into the "donations" that have been tied up since July -- but so do attorneys in California. Are we really surprised? Even Tim Draper, when asked a few weeks ago about how much he "donated" during the Tezos fundraiser, replied, “You mean how much I bought? A lot.”
Meanwhile the Tezos tokens (“Tezzies”) haven’t even been issued, and aren’t expected to be released before February 2018 at the earliest. And the Tezzie futures are down 75%... A painful contrast for those who “donated” Bitcoin in July valued at $1950 which would be worth $7,000 in early November.
This will be interesting to watch -- especially if the SEC comes to define it as an investment scheme that violated US securities laws. And even if the Tezzies come out in February, when, if ever, will the world ever get the self-healing, socialist crypto ledger that everyone was waiting for?
All of this remains to be seen, but this will probably teach many investors to not be so "generous" in the future. In hindsight it probably would have been better to just hodl Bitcoins, pass on the Tezos Foundation, and donate some dollars to PBS to get the tote bag.
?2017 Thoughtchain LLC