
Tezos founders push for legal bailout from Swiss foundation - petethomas
https://www.reuters.com/article/us-bitcoin-tezos-lawsuits-exclusive/exclusive-tezos-founders-push-for-legal-bailout-from-swiss-foundation-idUSKBN1DV4K0
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jasonmcalacanis
1\. ICO founders are getting a quick education in the fact that "anyone can
sue anyone at any time" \-- no matter what paperwork you have folks sign.

2\. What are the damages if they just give the money/coins back? That's the
easiest solution for these ICOs: a 100 days buy back/escrow period?

3\. Another easy solution is to have these ICOs hold the proceeds in escrow
and release of funds quarterly for five years to the startups/projects and
giving the investors the ability to refund half or 75% of their remaining
commitment (i.e. a 25-50% penalty for leaving the project early).

had the founder on recently
[https://youtu.be/rdRSUJkvmxM](https://youtu.be/rdRSUJkvmxM) \-- seems like
people who invested knew what they were doing going in.

~~~
charlesdm
Not fun for them, but nevertheless a very interesting lawsuit. What I am
interested in is the fact they used a Swiss foundation that they don't
actually control.

What happens when a US judge allocates damages for certain actions? They
declare personal bankruptcy? US judgements are also not always enforceable
abroad, so is it imaginable the foundation gets to keep the money regardless
of the outcome of any lawsuit? I would guess so.

~~~
paulsutter
Ethereum was the first cryptocurrency to form a foundation in Zug, and its a
popular structure. Generally the code and system are open sourced, and a
nonprofit foundation controls the money raised in the ICO.

[https://www.swissinfo.ch/eng/500-million-business_crypto-
pig...](https://www.swissinfo.ch/eng/500-million-business_crypto-piggybank-
foundations-proliferate-in-zug/43494680)

~~~
nivertech
All those Zug-incorporated ICOs exploiting loopholes in civil law:

1\. Tokenizing non-profit foundations (stiftungs), while traditional "stiftung
foundation has no shares or members" [1]

2\. Pretending that token allocations are unrelated to
donations/contributions.

3\. Using nonprofit foundations for clearly for-profit speculative activity.

[1]
[https://en.wikipedia.org/wiki/Stiftung](https://en.wikipedia.org/wiki/Stiftung)

~~~
microtherion
As a Swiss, I'm saddened that my country seems to have found yet another way
to get involved in shady financial dealings.

~~~
Hermel
The problem is not that setting up such a structure is possible, the problem
is the lack of suitable alternative legal structures that are better suited
for the job. For that, regulation needs to be relaxed.

------
pavlov
Tezos, the Theranos of ICOs.

When you know enough rich people, you can raise a lot of money on a PDF of
promises.

With all the money Tezos has, they're probably going to do what Theranos did
with Walgreens: pay their way into a fancy big partnership that gives the
impression that there's something actually going on.

~~~
socratesone
That's an easy but lazy reduction, and not accurate.

\- They raised from the public

\- Founder comp tied to release of a product that works

\- They are focused on making a product that works, not on optical theatrics
(in fact one of their biggest weaknesses is they've been horrible at optics)

~~~
staunch
> _\- They raised from the public_

Not quite right. They raised from their own investors _and_ the public, which
may be part of the problem.

If their own investors bought into their own ICO to "seed" it, which tricked
the public into thinking there was genuine demand, that might constitute
fraud.

~~~
igorgue
Ummm doesn’t a regular VC founded startup that IPOs does the exact same thing?

Some of them without even making money... actually loosing money!

~~~
jessaustin
If a startup never finds any paying customers, it will never IPO. The IPO is a
separate step from the initial investment, governed by rules intended to
protect the public. ICOs don't seem to represent anything of intrinsic value
(e.g. a successful business) so the public probably faces greater danger from
unscrupulous behavior.

~~~
pavlov
In the biotech / pharma world, it's common for startups to IPO years before
they have a single paying customer.

The difference between a biotech startup and many ICOs is that the former
typically has years of validated and peer-reviewed scientific research backing
up the hope of eventually having a product.

~~~
goldenkey
In that case, the "customers" are other scientists and drug companies that
_consume_ the research, will pay for partnerships, will pay for research to be
done by that lab, etc.. ICOs on the other hand don't have an acclaimed lab or
anything special other than a PDF with some buzz-bullshit.

------
JohnnyConatus
In other words, they tried to be clever in their structuring and now it's
biting them in the ass. Hoisted by their own petard.

------
nerdponx
So what exactly happened here? There was an ICO for a big new smart-contract
blockchain with some cool features, and the blockchain never materialized?

~~~
socratesone
It was a project that was and continues to be promising from a development and
utility standpoint, but that has been marred by terrible governance, internal
politics, and amateurish management

~~~
nihonde
And worst of all, their product is about improving governance. Not a promising
start.

~~~
Mtinie
In fairness, the foundation arm of the token's development _appears_ to be
operating in a reasonable and pragmatic way along their planned roadmap. It is
a related company, helmed by the previous "frontpeople" for the project that
has run into significant bumps and legal jeopardy.

Whether or not that means that the project will ultimately release, I have no
idea (nor vested interest in).

~~~
literallycancer
>the foundation arm of the token's development appears to be operating in a
reasonable and pragmatic way along their planned roadmap

Oh, yes? What have they done?

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MichaelAO
The Bitcoin Uncensored interview with Arthur Breitman is interesting to watch:
[https://www.youtube.com/watch?v=gsY5wXj4Xm8](https://www.youtube.com/watch?v=gsY5wXj4Xm8)

~~~
xorcist
It was a very interesting interview, mostly for the parts that weren't about
Tezos. Breitman explains the use case for Turing complete smart contracts:
Spending limits.

Everything else can be implemented by m-of-n multisig and off-chain oracles.
This is something anyone about to invest in smart contract technology should
think long and hard about.

~~~
runeks
> Breitman explains the use case for Turing complete smart contracts: Spending
> limits.

Does he have a good explanation for this? Because I fail to see how something
as simple as spending limits requires Turing completeness.

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fiatjaf
Can someone explain briefly the Tezos unique features and why would someone
want it?

In my understanding it is just a Bitcoin copy that has a voting feature to
decide protocol changes.

~~~
berberous
In addition to on-chain governance you mention (i.e. the built-in voting
features to decide protocol changes and avoid the civil war that's going on in
Bitcoin world), they use a functional programming language that is supposed to
be much safer and easier to code than the Ethereum language.

~~~
flunhat
Why not just write a compiler for that functional language (I think OCaml)
that outputs EVM bytecode? Seems very doable from afar...

~~~
hackinthebochs
No one's yet figured out how to ICO a compiler.

~~~
fiatjaf
ahahahah

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ggg9990
$257 million? Who are the morons keeping this hamster wheel spinning?

~~~
laxatives
That's pre Bitcoin inflation. Its probably valued over a billion USD now,
assuming they kept a decent chunk of the BTC in BTC.

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brianbreslin
So what's the likelihood my pre-sale in tezos ever gets returned or turned
into a viable coin?

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touchofevil
If you like the idea of Tezos, have a look at Cardano. It has on-chain
governance voting, formal verification, and the ability to upgrade the
protocol without the need for hard forks. Basically, all the stuff that got me
interested in the Tezos project.

[https://www.cardanohub.org/en/what-is-
cardano/](https://www.cardanohub.org/en/what-is-cardano/)

In the interest of full disclosure, I do own some Cardano.

~~~
isubkhankulov
Thanks for the full disclosure. Good luck with your investment but the
comments section for this article is probably not a good place to pump coins.

~~~
touchofevil
I don't think that letting people who are interested in Tezos know about a
coin with very similar features is "pumping" the currency. Tezos has some
really interesting features, but they have stumbled with the ICO and delayed
their release. As someone who was waiting for Tezos to launch I was excited to
hear about Cardano and I'm sure there are other Tezos enthusiasts here who are
happy to learn about the existence of similar coin. To say that I'm "pumping"
the coin implies that I will dump the coin, when I'm really just interested in
the Tezos technology, which is also present in Cardano.

------
stoev
I know that ICOs get a lot of negativity on HN. Sure, a lot of them deserve
it, but not all ICOs are started for the sole purpose of raising cash that
they otherwise wouldn't be able to raise. ICOs as a form of funding are
equally likely to be manipulated as traditional VC funding following trends
and hypes (one might argue that they ICO investors are even more gullible to
dishonest founders since they are generally less experienced than VCs).

However, certain ICOs are actually bringing products to market that would
never otherwise exist. Some of them are trying to fundamentally change how
some industries operate. Others are fundamentally improving blockchain
technology. But in order for their products to operate they need enough
stakeholders to make them viable. And this is where ICOs come in. There were
many of us who believed that Tezos was one of those ICOs. Their product could
still be greatly useful if executed correctly. Given that they have raised
more money then they could ever have hoped for, it is incredible that they are
being silly enough to embark on a public dispute between themselves and get
involved in lawsuits with their investors. Just getting back to work and
executing their initial vision (which they can do many times over with that
amount of funds) seems like an obvious thing to do. They would lose a lot more
money (or worse) by continuing on this trajectory. It is incredible how short-
term greedy they seem from the outside.

Or maybe I am missing some information that would explain this stupidity. I
would love to know more.

~~~
fiatjaf
I can't remember a single ICO that has brought anything useful to the market
yet.

You can say Ethereum, but it wasn't an ICO properly speaking. Even if it was,
a single good example in hundreds isn't enough.

Ripple didn't have an ICO, Bitcoin Cash didn't, Zcash didn't, Monero didn't,
Stellar didn't.

~~~
corv
Why wasn't Ethereum an ICO?

Arguably that was the model for all other ICOs and the platform for the vast
majority.

~~~
ddon
Ethereum had an ICO, back in 2014:

[https://blog.ethereum.org/2014/07/22/launching-the-ether-
sal...](https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/)

