Another Day, Another Class Action: Tezos ICO Sued by GGCC, LLC in California

The Tezos legal battle continues as the Restis Law firm in San Diego, along with Lite DePalma Greenberg, have filed a class action law suit in the state of California on behalf of GGCC, LLC against Dynamic Ledger Solutions (DLS), Tezos Stiftung (a Swiss Foundation), Kathleen Breitman and Arthur Breitman. As with the other class actions, the Plaintiff alleges securities fraud in the case of the Tezos Initial Coin Offering (ICO) which raised $232 million this past summer. That amount has since been upped as the price of Bitcoin and other digital currencies have risen dramatically. This filing pegs the total haul at $600 million.

The case explains:

“The ICO for the Tezos tokens was an illegal offer and sale of securities for which no registration statement was filed or then in effect, and as to which no exemption from registration was available. The ICO was a generalized solicitation made using statements posted on the Internet and distributed throughout the world, including in the United States, and the securities were offered and sold to the general public.”

According to the filing, the managing member of GGCC LLC, Brian Beeman, invested eleven Ethereum in the Tezos ICO (from a computer within the United States) to purchase 5,823.65 Tezos tokens.

Once again, Tim Draper gets a mention as Draper Associates invested about $1.5 million in DLS at approximately a $6 million valuation allowing Draper Associates to acquire approximately 25% of DLS shares. The participation of Draper, and other big name investors, helped to fuel the rapid funding of Tezos. As the document states, the “Tezos ICO was so “hot” that investors contributed $109 million worth of Bitcoin and Ethereum in the first 15 hours.” There is a certain amount of irony that the Tezos Terms of Allocation attempted to describe the ICO investors as making a “non refundable donation.”

The Rise and Fall of Tezzie Tokens

The Breitmans have been rather quiet of late – most certainly hunkering down with a team of attorneys. The internal conflict between the Tezos Foundation and the Breitmans looks profoundly trite compared to the mounting number of lawsuits filed against the Tezos creators – but then such a large sum of money can cause people to not think things through. The Breitmans probably wish now they had never, ever launched a token offering. The law firms that are filing these class actions see the alleged $600 million raised by the ICO as a fat target. Expect more class action participants to follow.

 


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