Tezos Investors Win $25M Settlement in Court Case Over $230M ICO

A U.S. lawsuit that alleged the Tezos ICO was an unregistered securities sale has been settled for $25 million.

AccessTimeIconSep 1, 2020 at 10:28 a.m. UTC
Updated Sep 14, 2021 at 9:50 a.m. UTC

A lawsuit alleging the Tezos initial coin offering (ICO) – that raised $232 million in 2017 – was an unregistered securities sale has been settled.

  • The Swiss-based Tezos Foundation, as well as the project's founders, Arthur and Kathleen Breitman, agreed to settle the case Friday.
  • While the Breitmans were involved parties, the Tezos Foundation paid the entire settlement amount of $25 million, according to the couple's representative, Jared Levy.
  • The presiding judge ratified the settlement agreement – which was first proposed in March – the same day.
  • The complaint, a class action for those who invested in the Tezos ICO, alleged defendants violated U.S. securities law by hosting an unregistered sale.
  • Allegations were first brought against the Tezos Foundation in late 2017 – months after the ICO concluded.
  • Crucially, the settlement means the court has not ruled on whether the Tezos ICO was an unregistered securities sale.
  • In a separate filing, lead plaintiff Trigon Trading argued settlement actually saved both parties, and the court, much work determining the regulatory status of token offerings, like Tezos, and whether they counted as securities sales.
  • Per Friday's order, the plaintiff's attorneys will take more than $8.5 million, a third of the total settlement, in fees and expenses.
  • Save small awards to the lead plaintiff, Trigon Trading, and other key figures, the remaining $16.5 million will be divided among those who invested in the Tezos ICO and had a monetary loss.
  • Those who gained from their investment, through selling at a profit or staking (dubbed "baking") their XTZ tokens will not be able to claim damages.
  • Trigon described the $25 million settlement as an "excellent result" for Tezos investors.

UPDATE (Sept. 2, 19:35 UTC): An earlier version of this article stated that the Breitmans would pay part of the settlement, based on a passage in court documents. The couple's representative later said the foundation is footing the entire bill.

Read the order here:

UPDATE (Sept. 1, 14:20 UTC): This article has been updated to clarify that the Tezos Foundation paid the $25 million settlement.


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