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Tezos ICO Class Action Looms After Motion to Dismiss Denied

Tezos ico class action looms after motion to dismiss denied

Tezos ICO Class Action Looms After Motion to Dismiss Denied

Tezos ico class action looms after motion to dismiss denied

A federal court judge in California has blocked a move that sought to dismiss a class action lawsuit alleging that the initial coin offering (ICO) conducted by the Tezos Foundation violated securities laws in the U.S.

The decision came Tuesday, as District Judge Richard Seeborg denied the motion filed by the Tezos Foundation and the cryptocurrency’s founding couple Arthur and Kathleen Brietman, as well as their U.S.-based company Dynamic Ledger Solutions (DLS).

As previously reported, the Tezos Foundation and DLS were facing four class action lawsuits following their ICO that raised $232 million in 2017 and was later accused of selling unregistered securities to investors in the U.S.

Based on the docket report of one case, dubbed “In Re Tezos Securities Litigations,” the class action lawsuits have now been consolidated into one with a lead plaintiff named Arman Anvari.

According to the judge’s order, the Brietmans argued in the motion that the ICO was administrated by the Tezos Foundation which is based in Switzerland and, as such, the couple and DLS should not be held liable.

However, the judge said the involvement of DLS “in establishing and aiding the Tezos Foundation rendered the two entities deeply intertwined, if not functionally interchangeable, throughout the ICO process.”

The defendants also argued as part of the motion for dismissal that the lawsuits were trying to use U.S. securities laws to govern an ICO for which “critical aspects of the sale occurred outside of the United States.”

The judge responded in the order that the realities of the ICO transactions “belie” such a conclusion, arguing:

“Anvari participated in the transaction from this country (the U.S). He did so by using an interactive website that was: (a) hosted on a server in Arizona and; (b) run primarily by Arthur Breitman in California. He presumably learned about the ICO and participated in response to marketing that almost exclusively targeted United States residents.”

Separately, the court granted the motion and dismissed cryptocurrency brokerage firm bitcoin Suisse as a defendant, saying that “in any event, bitcoin Suisse does not appear to be a key player in this action.”

See the court’s order below:

Tezos doc by CoinDesk on Scribd

Gavel image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Published at Wed, 08 Aug 2018 14:00:25 +0000

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China’s Central Bank Will Soon Regulate ICO’s

The People’s Bank of China is turning its attention Initial Coin Offerings (ICO), seeking to regulate the new form of crowdfunding.

China to Regulate ICOs

Although cryptocurrency withdrawals are back on the big three Chinese exchanges, the People’s Bank of China (PBoC) isn’t quite through with the cryptoworld. Now it seems like it’s going after Initial Coin Offerings (ICOs), seeking to regulate the new phenomena in the crowdfunding world.

Chinese publication Weixin reports that Yao Qian, head of Digital Currency Research Institute at PBoC, has stated that the PBoC will soon regulate ICOs.

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Initial Coin Offerings or ICOs are a way to fund projects or companies crowdfunding methods. This typically includes selling project tokens for fiat currency, bitcoin, Ethereum, and other popular cryptocurrencies. These tokens are usually required in order to use the platform or they can also represent equity through a dividend or buy-back program.

Current ICO Landscape

The news comes at a time where ICOs are extremely popular, gathering millions of dollars every week and amassing higher and higher market caps.

Most recently, the Basic Attention Token (BAT) ICO, gathered $30million in a matter of seconds, while the Aragon project gathered $20million in roughly 15 minutes. The MobileGo ICO gathered over $53 million in the course of its month-long ICO.

Poloniex

While most ICOs currently take place through the use of the Ethereum network, other projects are also getting in on the action, as is the case of the Waves Platform, Wings DAO, and Ethereum Classic.

Although some of these crowdfunding campaigns have had exorbitant returns for investors, many members of the community are also raising questions about the validity of some of these projects and if they are really worth tens of millions of dollars before having even built their project/platform or an MVP (minimum viable product).

Regulatory Clarity Could Boost Industry

Although the moratorium on cryptocurrency withdrawals has come to an end, the PBoC has stated that they are not yet done with bitcoin exchanges.  Now, bitcoin miners in the country are starting to shut down their operations in fear of future regulatory pressure like the one applied to exchanges.

Some bitcoin miners in the Szechuan province, a place with cheaper electricity prices due to abundant hydropower resources, have decided to shut down in fear of regulation. One miner told YiCai Global:

The price is so high at the moment. Shutting down costs mine owners hundreds of thousands of yuan every day.

In China, the pressure from the PBoC has resulted in a weakened bitcoin market, strict KYC policies and may now also affect mining and ICOs as well. However, regulation can also be helpful. In Japan, the new regulatory framework built around cryptocurrencies has allowed their popularity to grow in the country.

Can the new stance on Initial Coin Offerings by the PBoC change the ICO landscape? 

Images courtesy of CryptoCompare, Twitter, Shutterstock

The post China’s Central Bank Will Soon Regulate ICO’s appeared first on Bitcoinist.com.

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