After three years of fighting allegations that its ICO violated securities laws, Tezos finally decided to settle the class action lawsuit for $25 million on Friday.
According to court documents, the $25 million settlement will be paid entirely by the Tezos Foundation, even though its founders, Arthur and Kathleen Breitman, were also involved parties in the lawsuit. By agreeing to the settlement, the plaintiffs in the lawsuit have also relinquished their right to make further claims against the firm, or any of the other defendants. Judge Seeborg, the one to approve the settlement, noted that the case addressed novel issues for the first time, and that the agreement was “fair, reasonable, and adequate”.
The Tezos Foundation first became the target of the allegations in late 2017, only months after its ICO had ended, when the plaintiffs accused the foundation and its founders of violating U.S. securities law by conducting an unregistered sale. While the case is now over, settling it means that the court will not have the opportunity to rule on whether the ICO was an unregistered securities sale or not.
The court documents further note that the funds will be distributed between all entities that participated in the 2017 ICO, between July 1 and July 13, but did not have the opportunity to sell their XTZ tokens at a profit. In order to receive a share of the settlement, eligible parties have to file a claim before 16 October 2020.
With that said, not all $25 million will go to those that invested in the Tezos ICO, and had a monetary loss. While the plaintiff, Trigon Trading, will receive a small award, a third of the settlement ($8.5 million) will be taken by attorneys.