A legal dispute focusing on the legalities of the Tezos ICO is starting to make some traction in the United States, despite the actual offering being carried out in Crypto Valley, better known as Zug, Switzerland.
Zug is fast becoming a hotspot for cryptocurrencies and blockchain technology, it is the home of the Crypto Valley conference and thus has taken on the name for itself. What we are seeing here though, is a new intervention from courts situated a little closer to another valley, one better known as Silicon Valley.
What’s going on?
Tezos are being held accountable under United States law for the Initial Coin Offering of the Tezos token, which is deemed to be an unregistered security. Whilst this offering did not take place in the United States, the offering was hosted on a server in the United States and was managed by a company in California. Therefore, the logistics of this are a little awkward to say the least.
According to Bloomberg, US District Judge, Richard Seeborg has weighed in on the matter:
“The operative question quickly surfaces: where does an unregistered security, purchased on the internet, and recorded ’on the blockchain,’ actually take place? Try as the [Tezos] Foundation might to argue that all critical aspects of the sale occurred outside of the United States, the realities of the transaction are that the lawsuit’s lead investor participated in the ICO using a website hosted on a server in Arizona, run by a company founder in California.”
See the full article for yourself, here.
This poses quite good question, how can an ICO be regulated, if it doesn’t have a fixed geographical location? Moreover, is having a fixed geographical location a disadvantage to the project running the ICO?
In this instance, it does seem that the problem here is the fact Tezos can be considered a security token, one that was not registered but was operable within the United States, though is this really a fair argument?
Above all, this really does highlight the need for regulation within the industry if cryptocurrency adoption wants to stand a chance. We can’t just keep running lawsuits against cryptocurrency projects, instead, we need to build upon a framework of rules and regulations that can be used to categorise the legality of cryptocurrency projects, instead of this current system that just seems to, make it up as it goes along.