Tezos pays $25M to settle securities law class action suit

Fibo Quantum

Tezos has paid $25 million to settle a class-action lawsuit over securities law violations.

Court documents filed on Aug. 28, 2020 reveal that the $25 million will be distributed among “all persons and entities who, directly or through an intermediary, contributed bitcoin and/or ether to what the defendants describe as a fundraiser.”

Tezos was also forced to pay about $203,000 of litigation expenses. As a part of the settlement, the plaintiffs relinquish their right to make future claims against Tezos and other defendants in this lawsuit. 

This court decision does not come as a surprise. As Modern Consensus reported in March, the Tezos Foundation announced that it has entered into a settlement concerning a consolidated class action lawsuit worth $25 million.

The legal fight in question concerns the $232 million initial coin offering (ICO) that the Tezos team held in 2017, during the ICO craze. The lawsuit alleges that the coin distribution was an unregistered sale of securities.

Parties that are eligible to get hold of a portion of settlement funds have to file a claim before Oct. 16, 2020. 

Securities law infringement suits can result in huge damages, whether they are filed by disgruntled investors or the Securities and Exchange Commission. The SEC suits can be particularly deadly to projects, as Telegram learned when it was forced to abandon its TON blockchain and return $1.2 billion to investors, as well as pay an $18.5 million penalty. 

On the other hand, the SEC’s lawsuit against Block.one’s $4 billion ICO was settled for just $24 million. However, the project is still facing a class action lawsuit.