Tezos is a new decentralized blockchain that governs itself by establishing a true digital commonwealth. It facilitates formal verification, a technique which mathematically proves the correctness of the code governing transactions and boosts the security of the most sensitive or financially weighted smart contracts.
The company, backed by legendary venture capital investor, Tim Draper and many others, were able to raise 65,703 XBT and 361, 122 ETH totaling $232 Million. The company was able to close this sale out about 3 months ago. Yet, there have been a slew of problems afterwards.
They are now facing a class action lawsuit in California and there might be more lawsuits in the works.
What’s going on?
Tezos has been having quite a few troubles internally, primarily the struggle is based around power. The two parties involved in this fighting are the founders of Tezos, Arthur and Kathleen Breitman and the president of the Swiss foundation that assisted in the ICO setup and the development of the Tezos computer network.
It’s an interesting case because the foundation is supposed to be an independent entity under the Swiss law, so one would automatically think that this is a non issue and wouldn’t expect this situation to arise.
Another interesting aspect of this situation is that the founders own the source code via a Delaware corporation, but the foundation has all the funding, which at the time of this writing is a whopping total of $400 million.
The founders accuse the president of the foundation of a variety of things and is publicly claiming that Arthur is engaging in character assassination, something, he states Arthur has engaged in, in the past.
The main reason this matters is because the money that was invested has to grow appropriately and this can only be done with through the constant stewarding of operations and fulfilling the needs of the market. Operations in Tezos are then not up to par, as they need to be due to these skirmishes and dealing with the external issues as well. These issues are reflected in the value of their coins (tezzies) as it has fell and is fluctuating at lower levels than before.
Participants have to expect that there is a danger of not receiving a return on their investment, yet, there is claims by the president of their foundation saying they are working to resolve these internal issues.
The latest external issue of a lawsuit doesn’t help the company to focus on their operations, it is another distraction that can be a cause for concern.
The lawsuit simply states that the founders of Tezos defrauded investors’ and violated securities laws in the US. As Tezos tokens have not been released many investors have growing concerns and are seeking to see what will happen and what possible recourse they might have.
The Tezos mission still has long term merit yet the question is simply how to carry it out, how to move past current issues and continue operations.
It’s an interesting case for the resolutions and would set interesting precedents for future cases.
Many governments are also paying attention to these cases and are taking different approaches in how they deal with the larger market. For instance, two Asian countries China and South Korea have both said no to ICOs and have banned them in their nations.
When investing, understand that there might be variables to account for and the investment may not turn out like you expect. In some cases, it may have long term opportunities in others it may be a rocky road to the bottom. There are a lot of exciting projects, invest wisely!
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