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Tezos Founders on ICO Controversy: 'This Will Blow Over'

They didn’t take questions from the audience, nor did they say much, but many people in the crowd were amazed that Kathleen and Arthur Breitman took the stage at all.

In their first public appearance since a flurry of news stories documenting the internal power struggles impacting their blockchain project, Tezos, the married couple and business partners projected confidence that despite the governance issues, their technology will endure.

“Development is moving forward,” Kathleen Breitman said during their 20-minute onstage interview at Money2020 in Las Vegas Tuesday afternoon.

Onstage, she insisted that there was no critical underlying issue with the project itself – notwithstanding the couple’s public feud with Johann Gevers, the president of the Swiss-based non-profit foundation created to foster the development and adoption of the Tezos protocol.

“This will blow over once the board meets in a few days,” she said, adding that the foundation’s board of trustees is conducting an internal investigation to decide whether Gevers will remain.

Still, she acknowledged the difficulties of the situation:

“I mean, it stinks. It stinks. We’re both really embarrassed about the situation. But we trust the process that we put in place, and I think it will be resolved in due course.”

Her husband Arthur had a succinct message for the backers of the project, who are still waiting to receive Tezos tokens after the company sold $232 million worth of the cryptocurrency in July, stating: “Bear with me.”

Hot spotlight

Stepping back, the Breitmans previously accused Gevers of self-dealing, while he, in turn, has accused them of assassinating his character and attempting an illegal coup.

The situation has turned the couple into poster children for the controversies surrounding the ICO market – a hot topic given the amount of money raised via the offerings and the broader legal questions about whether some token sales may constitute securities offerings.

On the sidelines of the conference, many attendees wondered if the Breitmans’ legal counsel had advised them not to go through with the scheduled appearance. Either way, onstage, the couple was a bit more diplomatic when talking about their adversary. But only a bit.

Gevers “is probably not a good fit for the project,” Arthur Breitman said. “I think he did some things which were bad, and honestly it would be better for the project at this point if he walked away.”

Despite the situation, much of the conversation was relatively light.

Although, the discussion turned more serious when moderator Meltem Demirors, director of development at Digital Currency Group, and herself a Tezos backer, asked why the project ended up raising more than 20 times the $10 million the couple had initially envisioned seeking in September 2016.

In response, the Breitmans cited the rising prices of ether, bitcoin and other tokens in 2017, as well as the enthusiastic response to their project.

Early in the session, the Breitmans said that one of the reasons they started the project was to solve the governance challenges faced by bitcoin.

Later, during the discussion of their own governance problems, Kathleen smiled and told the audience:

“We appreciate the irony of the situation.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group.

Photo by Marc Hochstein. Left to right: Meltem Demirors, Arthur Breitman, Kathleen Breitman.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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What’s Going on with TEZOS? $3Billion Invested in ICOs! Are we Safe?

ICOs Bubble or What?

In a frenzy and booming of “getting rich quick” schemes, in just a bit more of 200 ICOs, until now are pumped-invested a whopping $3 Billion, investors expecting huge, astronomical return on investments!

With so much money at stake, the warning signs, red flags for future investors are there.

To what degree those investments in a non-regulated, sketchy ICO market are safe, or some of them just notorious scams and pump-and-dump, greedy money-grab schemes?

Some experts suggest for ICOs to be the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces.

The Securities and Exchange Commission has been warning for months for ICOs, even some countries are banning ICOs, in order to limit risks for buyers-investors, especially retail investors.


It is worth reminding everyone there are some founders who engineer an ICO to make money for themselves and not for investors, as the Tezos situation indicates.

Starting from a pre-sales, pre ICO discounts that many now see similarly as Ponzi structure that works against retail investors, creating an uneven playing field that will suit the bigger and institutional investors.

The idea of Tezos to make faster and more energy efficient platform than the existing solutions like Ethereum platform was very attractive with such an ambition competing Ethereum, which in other side has the Enterprise Ethereum Alliance behind it, and all powerful network.

One has to ask where was the lock-in for the founders of Tezos and the commitment to deliver what was promised in the White Paper to retail investors?

There is legitimate reason to ask questions regarding the actual situation within the Tezos’s ICO, a company whose only asset is the Tezos IP, which is a protocol only in alpha, not even ready for public beta testing; its unusual structure, the companies, foundations and the people that participated in it.

Infighting at Tezos reveals the ICOs structural issues and challenges, the single biggest problem being governance, closely followed by clarity of its structure, and most important because of the uncapped nature of the Tezos ICO!?

Tezos as one of the most hyped and controversial ICOs ever, is owned by DLS (Dynamic Ledger Solutions), which is owned by husband and wife Arthur and Kathleen Breitman and venture capital partners.

One of the biggest reason, if not the main the Tezos ICO was so hugely successful in raising funds is the involvement of high profile venture capitalists, such as Tim Draper and Polychain Capital likely as a seed investor, and worth noting, with a preferential deal.

Arthur and Kathleen Breitman, the husband-and-wife creators of the platform, are accusing Johann Gevers of mismanaging the funds raised in the Tezos ICO—a whopping sum of $232 million now reevaluated over $400 million, having in mind the rising value of Bitcoin and Ethereum.

As Founder and president of the Tezos Foundation, Johann Gevers has responded by saying the Breitmans are making outrageous claims against him in an effort to gain more financial control over the 65,703 bitcoins and 361,122 ether raised during the world’s largest ICO to date.

“This is attempted character assassination. It’s a long laundry list of misleading statements and outright lies … [They’re] attempting an illegal coup.”

It looks like Breitman’s and other DLS shareholders(Tim Draper) are selling out while retail investors are providing needed liquidity for this to happen, even as Tezos protocol was at best in the alpha stage of development, in meantime nothing positively has changed the same is now.

In Tezos ICO, substantially all of the Breitman’s wealth will be invested in Bitcoin and Ethereum, not Tezos! Actually the Brietmans (and other DLS shareholders) will be on the other side of the transaction from Tezos investors. So you can’t have a more clear-cut case of conflicting interests than this, where one side’s gain is other side’s loss.

It’s in the DLS shareholders interest to raise as much money as possible, so they will receive a minimum of 8.5% of the proceeds, vesting over four years, because the smart contract is programmed to pour out 1/48 of the Breitmans share of tokens every month for 48 months! It is clear the tokenomics were engineered in favour of early investors and the founders.

So why should Mr and Mrs Breitman and the VCs be rewarded before the Tezos proposition deliver on promises made, way before the venture has delivered anything substantial.

Some suggest the SEC might demand Tezos’ founders refund investors’ money… all $400 mln of it.

Even there are reports that a San Diego legal firm is considering filing a class action lawsuit on behalf of some US investors against the company Dynamic Ledger Solutions, Inc.

Investing in ICOs

Tezos among others is a book case and a reminder for us all that the greed of the few could ruin great ideas and ventures for everyone.

Is this a clear warning for future ICO token buyers and investors? Tezos should be a lesson for us all.

Do your own research and your own thinking while investing on ICOs as it should be everything disclosed upfront and the necessary controls and checks are put in place to protect retail investors and the value of the token.

Disclaimer the opinions of authors and other contributors are their own and should not be taken as financial advice…  All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice.”