California Judge rejects Tezos Foundation motion to dismiss an action class lawsuit, which now comprises four initial lawsuits against the company, its founders and the Dynamic Ledger Solutions.
9 August, AtoZ Markets – A federal court judge in California has denied an initiative that has sought to dismiss a class action lawsuit related to the Tezos Foundation initial coin offering (ICO). The lawsuit has alleged that the initial coin offering by the company has breached securities laws in the US.
California Judge Rejects Tezos Foundation Motion to Dismiss a Lawsuit
The federal court judge’s decision emerged this Tuesday, as the District Judge Richard Seeborg has dismissed the motion filed by the Tezos Foundation and cryptocurrency’s founders Arthur and Kathleen Brietman. Their US-based company Dynamic Ledger Solutions (DLS) is also involved in the lawsuit.
Tezos Foundation and DLS have been facing four class action lawsuits after their ICO has taken place. The ICO has raised $232 million back in 2017 and was later accused of selling unregistered securities to the US investors.
According to one of the cases’ reports, which is called "In Re Tezos Securities Litigations," the class action lawsuits are now grouped into one with the key plaintiff Arman Anvari. As per the Judge’s order, the couple behind the ICO has argued that the ICO has been administered by the Tezos Foundation that is based in Switzerland. Therefore, they claimed, they should not be held accountable.
DLS and Tezos Foundation are "deeply intertwined"
Yet, the judge has stated that 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 have also argued that lawsuits were trying to use US securities laws to govern and ICO for which "critical aspects of the sale occurred outside of the United States." Nevertheless, the judge has stated the following:
"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.”
The judge has stated that the realities of the ICO transactions "belie" such a conclusion.”
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