• T Skevington and M Bacina

Tezos token class action settlement: A USD$25M cost of infringement


A long-running class action against the Swiss-based Tezos Foundation and its founders has been settled. Initially filed in November 2017 in the District Court of California following Tezos' ~USD$230 million ICO, the complaint alleged that Tezos violated US securities law by undertaking an unregistered securities sale.


Crucially, the settlement means the court has not ruled on whether the Tezos ICO was an unregistered securities sale, much to the annoyance of lawyers everywhere.


The $25 million settlement amount will be split between the lead plaintiff's their lawyers, and the balance to those who participated in the Tezos ICO and had a monetary loss. This is slightly more than 10% of the amount raised by Tezos in the initial offering at the time (which sum likely increased given the values of ETH and BTC during that period) so may reflect a very small amount for the Tezos foundation to pay.


Each of the lead plaintiff's were given the following specific awards of damages:

  1. Lead Plaintiff Trigon Trading Pty. Ltd. ($7,500);

  2. Federal Plaintiffs Pumaro LLC ($7,500);

  3. Artiom Frunze ($7,500), Hayden Hsiung ($5,000);

  4. Gijs Matser ($5,000); and

  5. State Litigation Plaintiff Andrew Baker ($5,000).

The Court also approved an additional reimbursement of $475 to Trigon Trading Pty Ltd for costs and expenses directly related to their representation of the Settlement Class.


The Court also awarded the Plaintiffs’ Counsel attorneys’ one-third of the

Settlement Fund or $8,333,333.33, plus litigation expenses in the amount of $203,017.93, plus interest. The Court found that the amount of fees to the Plaintiff's lawyers:

is fair and reasonable under the “percentage-of-recovery” method given the substantial risks of non-recovery, the time and effort involved, and the result obtained for the Class

The remaining $16.5 million will be divided among those who participated in the Tezos ICO and suffered a monetary loss, which they will need to substantiate. Australian class actions, of course are very different with law firms not entitled to percentage of recovery fee structure (which are permitted for Litigation Funding firms who are often involved).


To date, Australia has not seen any class actions against token issuers.

© Michael Bacina. All rights reserved

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