No refund for Tezos contributors, cryptocurrency broker says

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ZURICH/LONDON (Reuters) – Backers of the embattled Tezos tech project should not expect to receive refunds, according to the Swiss cryptocurrency broker that helped it raise $232 million in July.

Zug-based Bitcoin Suisse also said in a statement it “is not currently aware” that any of the funds “have been mismanaged, lost or are put at risk” by the project’s organizers.

A Reuters investigation last month detailed a battle over control of the Tezos project between its founders – Arthur and Kathleen Breitman – and Johann Gevers, the president of a Swiss foundation the couple helped establish to handle the coin offering and promote and develop the Tezos computer network. (reut.rs/2gPOMNH)

The dispute has significantly delayed the project. New digital coins linked to the project, called “Tezzies,” have yet to be issued to contributors. They were told they were making a “non-refundable donation” to the Tezos Foundation in Zug and may never receive any. The participants made their contributions in bitcoins and another cryptocurrency, ether, which have since jumped in value.

Bitcoin Suisse’s chief executive, Niklas Nikolajsen, told Reuters on Wednesday that since the dispute, it had suspended “major movements of any kind of funds” at the Tezos Foundation’s request. He did not elaborate.

Gevers said last month the foundation had slowly begun selling the virtual currencies – about $10.2 million worth a week – and planned to invest the proceeds in a diverse portfolio.

Nikolajsen said the broker issued its statement, which was released Monday, after receiving emails from concerned participants in the Tezos fundraiser.

A class-action lawsuit filed in a California state court last month alleged Tezos’ organizers violated U.S. securities laws and defrauded participants. It is asking that plaintiffs receive a refund as well as damages. Brian Klein, an attorney for the Breitmans, said the lawsuit “is without merit” and the couple “are going to aggressively defend themselves.”

In the broker’s statement, Nikolajsen said “we made it perfectly clear” that contributions to the Tezos project were “to be considered a highly risky proposition.” The fundraiser’s terms specified refunds “would not be possible, due to both regulatory reasons as well as practical reasons,” he said.