Dynamic Ledger Solutions, Tezos Stiftung Facing Securities Suit After Initial Coin Offering

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Dynamic Ledger Solutions, Inc., its two individual owners, and Tezos Stiftung are facing a securities lawsuit filed over a July 2017 “Initial Coin Offering” (ICO). According to the complaint, the defendants developed a new cryptocurrency known as Tezos and launched a fundraising project for the platform during which investors “purchased” Tezos tokens using bitcoin and ethereum. The suit argues that the tokens, which allegedly grant purchasers “voting rights,” are essentially securities, and that the defendants failed to file a registration statement with the Securities and Exchange Commission before initiating the project.

The case claims the defendants posted a document online titled “Contribution Terms” in which they expressed that Tezos investors “could receive absolutely nothing” in exchange for the $252 million of bitcoin and ethereum generated by the ICO. The individual defendants noted that the project “could be fully or partially abandoned” at any point, according to the complaint, financially injuring the plaintiff and others who purchased Tezos tokens.