In December 2017, a class action lawsuit was filed against several defendants, including Tezos Stiftung (“Tezos”), Timothy Draper, Bitcoin Suisse. The complaint alleged that defendants violated California Corporation Code Section 25110 and they partook in unfair competition.
Bitcoin Suisse successfully filed a motions to dismiss the complaint, which U.S. District Judge Richard Seeborg of the Northern District of California granted. Draper also filed a motion to dismiss and the court granted the motion, but gave plaintiffs leave to amend. Plaintiffs have 20 days to amend their complaint against Draper for the case to move forward against him. Failure to amend can lead to complete dismissal.
In its order, the court stated that plaintiffs failed to show:
Draper’s daily or overall participation in the Tezos project or corporate entities. Instead, [plaintiffs] asks that his claim move forward [against Draper] on the strength of two facts alone: Draper’s minority stake in DLS, and the temporal proximity of Draper’s investments to the Tezos ICO. Admitting the well-settled legal inadequacy of the former to sustain a ‘control person’ claim, [plaintiff] leans heavily on the latter to suggest Draper is a fast-moving puppet master. Fatal to [plaintiff’s] suggestion, however, is a fact he pleads elsewhere: since that ‘since at least mid-2016’ – a year prior to news of Draper’s investment – the Breitmans had been targeting an early 2017 fundraiser. Compl. ¶ 49-51. In other words, even supporting Draper’s controlling hand in the ‘isolated corporate action’ of the ICO could support Section 15 liability, that inference is unsupportable on the facts of the complaint.
Essentially, the complaint failed to present facts to support its contentions against Draper. It will be interesting to see if plaintiffs file an amended complaint within the allotted time frame.