claims against venture capitalist Tim Draper and Bitcoin Suisse in a Tezos class action lawsuit have been dismissed.
No Direct Control
According to U.S. District Judge Richard Seeborg of the Northern District of California, the motions by Draper and Swiss-based crypto financial services company Bitcoin Suisse to dismiss them as defendants in the Tezos securities litigation case have been granted. In the case of Draper the motion has been dismissed with leave to amend while for Bitcoin Suisse it has been dismissed without leave to amend.
Per Seeborg, the lead plaintiff in the class action lawsuit, Arman Anvari, failed to argue the “statutory seller” claim against Draper and Bitcoin Suisse plausibly.
Additionally, Seeborg ruled that Draper had no direct control over Tezos and thus could not be held individually responsible as a “control person.”
“Absent further averments regarding Draper’s “power to direct or cause the direction of [Tezos’] . . . management and policies,” as evidenced by his routine interactions with either DLS or the Foundation, Anvari cannot plausibly allege that Draper is liable as a control person,” Seeborg wrote in Case 3:17-cv-06779-RS.
Motions by the co-founders of Tezos, the husband and wife team of Arthur and Kathleen Brietman, as well as their firm Dynamic Ledger Solutions and Swiss foundation Tezos Stiftung were, however, denied.
In their motions to dismiss them as defendants, they had argued that the initial coin offering (ICO), which was conducted last year and raised $232 million by the time it closed on July 14, was merely a fundraiser.
United States Jurisdiction
Seeborg ruled that the defendants had passed the “personal jurisdiction” test since they had developed the Tezos.com website in the English language hosted on a server located in Arizona as well as structured the initial coin offering in a way that accommodated U.S.-based participation. Additionally, the U.S. district judge also determined that the Breitmans and Dynamic Ledger Solutions passed the “control person” legal test.
“As noted in the above discussion of Section 12 liability, DLS’ role in establishing and aiding the Tezos Foundation rendered the two entities deeply intertwined, if not functionally interchangeable, throughout the ICO process … While the Breitmans and DLS are free to renew their arguments regarding the detached operation and structure of the Foundation at later stages in this litigation, at this point, Anvari’s allegations are sufficient to enable his Section 15 ‘control person’ claim against them to survive dismissal,” wrote Seeborg.