Tezos Embroiled in a Million Dollar Boardroom Wrangle for Control Over ICO Proceeds

Tezos, a blockchain startup that raised $230 million through an ICO in July, is tied up in a management wrangle over the Tezos' foundation structure.

Tezos, a blockchain startup that raised $230 million through an ICO in July, is tied up in a management wrangle. The future of the venture hangs in the balance as the founders are embroiled in a legal struggle with the Swiss foundation, the nonprofit controlling all the proceeds from the token sale. 

Arthur and Kathleen Breitman, Co-founders of Tezos, are seeking to oust Johann Gevers as the president of the non-profit that now controls $400 million worth of ether and bitcoin. Gevers is accused of misrepresenting the true value of a bonus he granted to himself in a nine page letter sent by the couple's attorney. Still, in the letter, the Breitmans are also pushing for a restructuring of the Tezos foundation to give them positions on the board.

In light of the management battle, board members have requested Johann to step aside and pave the way for an investigation by the foundation's auditor.

But Gevers has reiterated he will not resign, going as far as accusing his fellow board members of attempting a coup. Speaking to Reuters, Gevers shared his side of the story:

"this is attempted character assassination. It's a long laundry list of misleading statements and outright lies. The Breitmans have been trying to control the foundation as if it were their own private entity by bypassing the foundation's legal structure and interfering with management and operations."

The million dollar dispute risks putting the project on ice until next year, with conservative estimates of February 2018. Already, the formal start of trading is held up until the platform goes live. It has been a long wait for investors since the end of the ICO in July. Buyers who participated in the Tezos crowdfunding have received little in the way of official communication regarding the overall project and distribution of tokens

CTO Arthur Breitman broke the silence on Thursday when he came clean on the holdup. Writing on a medium titled "The Path Forward," Arthur disclosed details of the tussle that's been going on behind the scenes since the record-breaking crowdsale. He wrote:

"In early September we became aware that the president of the Tezos Foundation, Johann Gevers, engaged in an attempt at self-dealing, misrepresenting to the council the value of a bonus he attempted to grant himself."

While the Swiss foundation controls the proceeds of the Tezos ICO, Dynamic Ledger Solutions Inc., a company registered to the Breitmans, lays claim to all of the Tezos-related intellectual property.

The Tezos project is a glimpse of the murky world of the recent flurry of ICOs that has caught the attention of regulators. This year alone, over $2 billion has flown into similar projects some of which are dubious business proposal while others are outright scams. Most of them, however, share similar complex structures like the Tezos project, in a bid to avoid regulation as securities.

But regulators are not convinced and believe some of the projects fall under securities laws. Financial agencies in the United States, China, Hong Kong and Switzerland and other countries are investigating ICOs for potentially stricter regulation.