All is not well in Crypto Valley.
One of the highest profile digital-currency projects in Switzerland, a country that’s been among the most enthusiastic advocates for cryptocurrencies, is under fire from both outsiders and insiders over allegations of false marketing and mismanagement, prompting its president to resign.
Now the Tezos Foundation, which raised $232 million in an initial coin offering, is engaged in the most American of pursuits: a round of lawsuits.
The non-profit’s fundraising touted an all-new model for the blockchain technology that underpins cryptocurrencies. A group of investors are claiming in a California court that the entrepreneurs behind the offering misleadingly marketed the purchase of “Tezzie” tokens as part of a charitable contribution, which would leave investors with nothing if the project collapses.
Switzerland ranks second just behind the U.S. in capital raised in ICOs, with most of the transactions done by foreigners flocking to Switzerland, according to a 2017 report by venture capital firm Atomico. This case has broad implications for Switzerland’s future as a launching pad for ICOs.
“Will the judge accept the narrative that this was just like contributing to public radio and all you get is a tote bag, or was it an investment where everyone expected a return,” says Stephen Palley, a lawyer who runs the cryptocurrency practice at the firm of Anderson Kill in Washington. “The structure was misused and the age of token entrepreneurs going to Switzerland to set up Swiss foundations is probably over.”
To read the full story: Switzerland’s Crypto Crush Marred by $1Billion Spat