Venture capitalist Tim Draper has been let off the hook for now in the Tezos class action lawsuit.
According to U.S. District Judge Richard Seeborg of the Northern District of California, the motions by Draper and Swiss-based crypto financial service company Bitcoin Suisse to let them go as defendants in the Tezos securities litigation case have been approved. For Draper, the motion has been dismissed with leave to amend while for Bitcoin Suisse it has been dismissed without leave to amend.
According to Seeborg, the main plaintiff in the class action lawsuit, Arman Anvari, was unable to reasonably challenge the “statutory seller” claim against Draper and Bitcoin Suisse.
Moreover, Seeborg ruled that Draper had no direct control over Tezos and hence 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, including their firm Dynamic Ledger Solutions and Swiss foundation Tezos Stiftung were not approved.
In their motion to dismiss them as defendants, they contended that the initial coin offering, which was done in 2017 and made $232 million was just a fundraiser.
Seeborg ruled that the defendants had passed “personal jurisdiction” test given that they have created the Tezos.com website in the English language hosted on a server found in Arizona including structuring the initial coin offering in a way that encouraged U.S.- based participation. Moreover, the U.S. district judge also maintained 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.