A Californian judge has given preliminary approval for a $25 million settlement proposed by the Tezos Foundation to end a consolidated class-action lawsuit.
The lawsuit dates back to shortly after Tezos’ $232 million initial coin offering (ICO) in July 2017, when investors started filing claims against the firm, accusing Tezos of issuing unlicensed securities in the U.S.
According to court documents from an April 30 hearing, the judge wrote, “the Court will likely be able to approve the settlement, subject to further consideration at the Settlement Hearing”. The date for the Settlement Hearing is yet to be set.
If the foundation is found liable in the suit, estimates of damages range from under $1 million to more than $150 million. The proposed $25 million settlement will provide class-action members damages equivalent to between 16%, to more than 100%, of the estimated damages.
Tezos denies any wrongdoing
The foundation denies any wrongdoing during their ICO, and wrote in a blog post they had chosen to settle out of court because lawsuits are “expensive and time-consuming” and they preferred a one-time financial cost:
“The Tezos Foundation chose to settle all claims because the Tezos Foundation believes it is in the best interest of the Tezos project and community as a whole. The Foundation continues to believe the lawsuits were meritless and continues to deny any wrongdoing.”
Making it hard for the SEC
The SEC has also investigated the firm in relation to their ICO but is yet to bring a case against Tezos. Should the current settlement be finalized, the SEC may find it more difficult to build a case that the Tezos Foundation has acted in bad faith.
While the lawsuits may have scared some investors away from Tezos, supporters don’t seem too worried with one Reddit user saying “it’s water under the bridge…” and another saying they were “a lot more worried about the SEC than this class-action.”
Tezos’ assets have almost tripled in value since the ICO with the Foundation’s March 9 report revealing assets in excess of $630 million.
