The Tezos foundation has agreed to pay a $25 million settlement to early investors in the ICO. In a hearing on Friday, a judge finalized the settlement. Does this affect rulings on other ICOs?
The United States Securities and Exchange Commission (SEC) has been keeping an eye on many of 2017’s ICOs. The view of the SEC seems to be that these ICOs were unlicensed, and therefore illegal securities.
Since late 2017, the Swiss-based Tezos Foundation has been litigated for ICO practices. Not only were investors misled, say litigators, but the ICO was an unlicensed and unregulated securities sale. This is one of the first major cases to tackle the ICO issue.
On Friday, the settlement between investors and Arthur and Kathleen Breitman, founders of the Swiss-based Tezos Foundation, came to an end. The foundation paid the full amount of $25 million. “All persons” who purchased coins in the July 2017 ICO will receive a portion of the settlement.
The Tezos blockchain recently celebrated two years since its inception.
No Tezos Securities Blanket
Though the judge did award plaintiffs money in the settlement, it did not rule on whether or not the sale was technically a securities sale.
Despite the lack of judgment on the issue, the three-year-long court battle came to an end. After a public hearing on Thursday, the judge terminated the case on Friday. As per the order, attorneys will receive $8.5 million per their fee. Tezos ICO participants who lost money will receive the remainder of the settlement. The court awarded damages only to those plaintiffs who lost money.
While this case did not rule on the legal status of ICOs, other such laws are in the works. The U.S. Congress is considering different bills to codify laws about cryptocurrency. This includes the “Cryptocurrency Act of 2020”, introduced in March.
A few lead plaintiffs received separate damages over individual complaints. These amounts were small, under $10,000. These acted as reimbursement for expenses such as trading fees.
Judge Richard Seeborg, who presided over the case, felt the litigation had occurred fairly and was pleased about the “cutting edge” judgment.
The case began when a few private clients began litigating the Tezos Foundation founders over the alleged unlicensed securities sale. The case quickly grew to a class-action suit. The ruling pleased Trigon Trading, the primary plaintiff.
Participants in the ICO were able to interact with the class-action suit via the litigator’s website, https://www.tezosfoundationsettlement.com/. Those who purchased tokens, but did nothing, are still eligible to receive their portion of these funds.
The $25 million is unlikely to slow Tezos down, however. According to Coinmarketcap, the crypto asset still has a market cap of about $2.5 billion. It holds 13th place on the list of largest crypto assets by this measure.