The Wall Street Journal published a report about a feud between Tezos’s founders and the president of the foundation. Since the report was published, a class-action lawsuit was filed against Tezos. The complaint accuses Tezos of violating US securities laws by selling unregistered securities and defrauding participants/investors. Tezos’s token sale states that investors aren’t entitled to the tokens. Tezos’s terms actually state that participants are making a donation to the foundation.
“Contributions to the Tezos' foundation's fundraiser are not ‘investments’. The foundation will recommend allocation of tokens in the genesis block based on contributions. Much like a fundraising campaign on Kickstarter, donors make donations with the expectation that the project leaders will progress the project and deliver the benefits in good faith.”
This case is probably a quick money grab. The lawyer who filed the case is 4 years out of law school, and I’m sure he is looking to settle. Even if the plaintiffs can get a guilty verdict, the ability for them to collect will be limited. Tezos is a Swiss Foundation, and all of their assets are in Switzerland (many of which are digital currencies).
However, this still will be a litmus test for future token sales. Case precedent might be set which which will determine if tokens fall under traditional securities’ laws. I wouldn’t be surprised if this case begins to develop more momentum, and the SEC steps in to investigate. Ultimately, if a company raises raise $232 million dollars and claims it’s a donation despite the fact that everyone involved expects to receive something, there is probably something wrong. “If it walks like a duck, and talks like a duck, it’s probably a duck”. I wouldn’t be surprised if Tezos is classified as a security, and this class-action is just the first of many legal salvos.