Did Tim Draper Support Tezos As A Scam? The Community Explodes Around Controversial Guidelines
An ICO backed by Tim Draper, created to solve government protocols and encourage innovation; this was Tezo's argument when they launched their ICO in July 2017. A year later, investors have still not received their Tezzie (XTZ) tokens, after they raised $232 million dollars in funds.
Tezos promised to be a self-amending crypto ledger that was built to improve upon the Bitcoin (BTC) and Ethereum (ETH) blockchains. It was a system of governance that allows the creation of new solutions on the blockchain. The innovation was going to be rewarded using XTZ tokens.
The facts began when Tim Draper, Bitcoin's billionaire, invested $6 million in the company before the sale of the ICO. It had an 8.5% stake in the company, together with its founders Arthur and Kathleen Breitman. The company in question was Dynamic Ledger Solutions, which supervised Tezos’ ICO.
After the sale of the tokens in the offer, the company was valued at close to $ 200 million dollars. However, the ICO was uncapped, reducing the need to negotiate in the secondary markets. 10% of all the tokens invested in the ICO were reserved for the company.
The ICO raised more than 65,000 in BTC and 361,000 in ETH, and made headlines for the amount of funds raised. This, coupled with the uncapped ICO, led many to believe that venture capitalists and board stood members earned the most.
The platform seemed to be archived, however, as there were governance issues with the board and the founders. The network was not released to investors, and rumors that Tim Draper left after doubling his profits flew. Johann Gevers, one of the board members, was called self-financing and self-promotional and allegedly had a conflict of interest on the part of the Breitman couple. Gevers responded by saying that it was an:
“…attempted character assassination…”.
A few months later, the Tezos Foundation was facing 4 class action lawsuits as the product was not released to the public. In addition, investors had not received the XTZ tokens they purchased. So far, XTZ tokens have not been released to the public. The lawsuits in question charged the company for selling an unregistered security, misrepresenting the use of the funds raised, misrepresenting when the network would be launched, and claims of false advertising and misleading business practices.
In February 2018, Kathleen Breitman threatened to “become corrupt” and release the code and the project for people to use. These assertions were not supported, but the foundation published a roadmap for the future of the currency in April. The press release also stated that a new, more competent council had been appointed.
Yesterday, the Tezos Foundation came out of its lethargy to announce that investors would have to follow the KYC and AML guidelines to obtain a refund or to go ahead with the network. After the completion of KYC, investors will receive codes for the activation of their public key hashes. These will take effect during the betanet launch.
The community was outraged by the announcement, as the Tezos subreddit and Twitter page were overrun by contributors who claimed it was a scam. Even the co-founder of Ethereum, Vitalik Buterin, explained on Twitter that things were being done wrong, since it would be best to allow third parties to simply run a script to scan the BTC / ETH blockchains, see how much everyone contributed, calculate the amount of XTZ everyone should get and generate the genesis block without the participation of Tezos Co. He claimed that's how Ethereum's launch worked.
So far, the community is still enraged in social media and the company has not said anything about the angry opinions of users.