Within a few months after a successful $232 million ICO raise from the sale of XTZ in 2017, the Tezos Foundation ran into a legal issue. Early investors sued the Tezos Foundation and its founders for selling what was allegedly “unregistered securities,” a move that led to a delayed launch for the project.
After several court cases, the Tezos Foundation announced in March it had entered into a preliminary settlement agreement with the plaintiffs and mapped out a $25 million settlement package, pending approval from the law court.
On August 28, District Judge Richard Seeborg approved the $25 million settlement from Tezos, and also specified a distribution model for the funds, including a provision for one-third of the total sum to go to the plaintiffs’ counsel.
Other beneficiaries will include “all persons and entities” that participated in the Tezos’ 2017 ICO, which took place from July 1 to July 13. Those who sold their XTZ tokens for a loss before Nov. 25, 2019, investors who did not sell their tokens before Nov. 25 and those that are unable to access their XTZ due to lost passwords will be the primary beneficiaries.
Eligible parties must file a claim on or before October 16 to stand a chance to receive a share of the settlement. Receiving this share as per the court’s ruling would mean that the plaintiffs relinquish any power they have to make future claims against the Tezos Foundation and other defendants.
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Another fact worth noting is that the current settlement does not involve any U.S government agencies such as the Securities and Exchange Commission (SEC). Although the regulator has filed several cases against projects that raised funds from token sales during the 2017 ICO mania, it is yet to file any such lawsuit against the Tezos Foundation.
In the meantime, having no other legal burden to contend with should allow the Tezos project to onboard new investors and partners after spending almost the last three years fighting the class-action lawsuit.
Tezos is currently the 14th largest cryptocurrency by market cap, according to crypto data aggregator, Coingecko. Trading at a $3.37 price at press time, XTZ had a market cap of $2.34 billion.
