Tezos’ Federal Lawsuit Is Still Ongoing, Community Lawyer Says
Class action victory has no impact on federal case.
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Long-running litigation concerning Tezos’ status as a security is still in progress, according to a lawyer in the project’s community. Alex Liu of Tezos Commons has indicated that a federal lawsuit has not yet ended, contrary to widespread suggestion.
Commenters on social media have wrongly concluded that the federal lawsuit is over based on the dismissal of a separate class action lawsuit. “Even though that would certainly be great news for the Tezos community, unfortunately, that’s not true,” Liu says.
He adds that there has been “no significant movement” on the federal lawsuit apart from the fact that it has been rescheduled for early next year. A conference was previously scheduled for Dec. 12, and it will now take place on Feb. 6, 2020.
Not a Typical Securities Lawsuit
Though the federal lawsuit concerns Tezos’ status as a security, the suit was not filed by the U.S. Securities and Exchange Commission. Instead, Tezos is being sued by private parties who are seeking a refund and damages for their investment.
Projects that have faced the SEC, such as EOS and Sia, have tended to reach quick settlements and gain regulatory approval. By contrast, Tezos will not gain much by giving into its opponents, which may explain why the case has lasted since 2017.
This week’s delay, though, seems to be due to the holiday season. “This is when all courts (both state and federal) start to wind-down for the year due to the many days off,” Liu writes, adding that courts tend not to take on complex litigation during the break.
What Makes a Security?
Tezos’ possible categorization as a security is vitally important, as the SEC places restrictions on securities investment. Liu has suggested in the past that, although mainstream reports have caused misconceptions, the SEC is not investigating Tezos at all.
Tezos intends to keep things that way. Though most new cryptocurrencies and token sales are considered securities, the fact that the Foundation Tezos is not pursuing exchange listings may prevent it from being classified as a security, according to Liu.
Finally, the status of Tezos’ token has no relation to whether third parties can use the platform to run a Security Token Offering. Tezos has already attracted a number of STOs, such as those from tZero and Elevated Returns, so it seems to be safe in that regard.