Tezos Backers Told They’ll Lose All Their Money

Tezos backers who want to get refunds shouldn’t expect to do so, according to news from Reuters, citing Bitcoin Suisse, the Swiss cryptocurrency broker that helped the blockchain startup raise $232 million this past summer.

Bitcoin Suisse said it is not aware that any of the funds invested have been mismanaged, lost or at any risk by the founders of Tezos. But concerns have been mounting ever since a report by Reuters shed light on a dispute at the project, which is hurting its prospects of getting up and running.

Bitcoin Suisse’s chief executive, Niklas Nikolajsen, revealed that since the argument broke out, it has halted “major movements of any kind of funds” at the Tezos Foundation’s request. The executive declined to elaborate further. Nikolajsen said “we made it perfectly clear” that contributions to the Tezos cryptocurrency project were “to be considered a highly risky proposition.”

The comments by Bitcoin Suisse come as Tezos is being sued in a class-action lawsuit. A lawsuit filed on Oct. 25 in California Superior Court in San Francisco argues that Tezos violated U.S. securities laws and defrauded investors in its initial coin offering (ICO) because it hasn’t yet issued any digital coins.

What’s more, the lawsuit contends Tezos told participants that they were making a donation and that they may never receive any tokens as a result of investing in the ICO. The defendants include the co-founders of the project, Kathleen and Arthur Breitman; their Delaware-based company, Dynamic Ledger Solutions and Strange Brew Strategies, a communications company that was hired to sell the venture to investors. Additional defendants include the Tezos Foundation, a Swiss entity that the Breitmans created to handle the ICO, as well as its President, Johann Gevers. Brian Klein, an attorney for the couple, told Reuters the lawsuit was without merit and that the Breitmans plan to “aggressively defend themselves.”

According to Reuters, the lawsuit was prompted after an investigation by the news agency. An Oct. 18 report stated that Gevers and the Breitmans were fighting over control of Tezos, which has resulted in significant delays to the venture.

The goal of the venture was to create a computerized network for transactions that rely on blockchain technology, which is the underpinning for bitcoin and other cryptocurrencies.