Fight Breaks Out in $232 Million Project Tezos, Centralization Issue Which Buterin Warned

Earlier this week, the Wall Street Journal reported that the founders of Tezos, the Ethereum-based blockchain project which previously had raised $232 million from its initial con offering (ICO) have engaged in a legal battle over the ownership of the project.

By far, Tezos, the blockchain project endorsed by billionaire investor Tim Draper, has run the most successful ICO in history, surpassing other projects such as Bancor that have raised over $150 million in their campaigns.

Tezos Launch Delayed Due to Ownership Conflict Amongst Founders

But, upon raising over $232 million in its ICO, Tezos has not even come close to introducing its software and product to the public. More importantly, the launch its crypto-token, which investors have been highly anticipating, has been delayed indefinitely.

Paul Vigna of WSJ has revealed that the delay in the launch of Tezos was triggered by an ownership battle between the wife and husband duo Kathleen and Arthur Breitman, and Tezos founder and president Johann Gevers. According to Vigna, an attorney representing Katheleen and Arthuer Breitman sent a document to the Tezos Foundation’s board, requesting the removal of Gervers. Vigna wrote:

“A lawyer representing the Breitmans on Sunday sent a nine-page letter to the foundation’s board, demanding that its founder and president, Johann Gevers be removed, or they would withdraw their support from the project. He has alleged the Breitmans’ involvement in his work ‘was incompatible with the needed independence of the foundation,’ according to a separate letter from a Breitman lawyer, which referenced a Sept. 21 meeting at which Mr. Gevers made the claim.”

Consequently, until the conflict between the founders of the Tezos project is resolved, the launch of the Tezos platform and its token will be delayed, indefinitely.

Vitalik Buterin Warned This Centralization Issue in ICOs

The Ethereum blockchain network and protocol in which ICOs are conducted are decentralized. But, it is difficult to justify ICO projects on Ethereum as decentralized projects, because they are operated by centralized development teams. Public blockchains such as Bitcoin and Ethereum are sustained by open-source communities.

Bitcoin for instance, is run by an open-source community of developers, miners, businesses, node operators, and users. A centralized group of authorities or founders cannot manipulate, censor, delay, or alter the Bitcoin protocol in any way, without launching an attack on the Bitcoin blockchain, which is virtually impossible.

In an interview with major South Korean business and financial news publication Joong Ang, Buterin explained:

“ICOs are a powerful tool and one that in many cases is an important aid in funding protocol development. In general, open-source protocols are very hard to monetize, and so the fact that in this particular area, we actually do have a way to monetize protocol development is something that we should be thankful for. However, they also have their flaws, and I think many of these flaws arise from the fact that even though the ICOs are happening on a decentralized platform, the ICOs themselves are hardly centralized; they inherently involve many people trusting a single development team with potentially over $200 million of funding.”

Essentially, investors in projects like Tezos, which describe the ICO process as a “non-refundable donation” have to trust in the blockchain project and its founders to deliver upon their promise because apart from that trust, there exists no legally binding agreements the founders have to commit to.

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Initial Coin Offerings (ICOs) and crowdsales have become the new way of fundraising in the startup ecosystem. If the company or the product has got remotely anything to do with blockchain or fintech, then the chances of success are much higher. Tezos, a blockchain self-governance platform has proven it by breaking records to become the highest grossing ICO of all times.

The recently concluded Tezos crowdsale has raised over $230 million within a span of 13 days. The ICO which went live on July 1, 2017, attracted 65,645 BTC and 361,112 ETH, surpassing all the earlier records to become the most successful ICO ever. The total funds collected by Tezos is at least $80 million more than Bancor, which held the previous record by raising a total of about $150 million.

The creators of the platform call Tezos a “self-amending” cryptoledger, which entirely transfers the power to decide network-wide protocol level changes to the stakeholders. The model adopted by Tezos is expected to prevent a repeat of the issues currently being faced by Bitcoin Network and the earlier predicament that forced Ethereum to introduce a hard fork.

The platform is conceptualized by Dynamic Ledger Solutions Inc, a company founded by Arthur and Kathleen Breitman. Arthur’s education includes math, physics, and computer science. He has been intimately involved in the financial industry as well, following his stints in Goldman Sachs and Morgan Stanley. Similarly, Kathleen has been associated with the Wall Street Journal, Bridgewater Associates, Accenture, and R3.

Apart from the founders, the Tezos platform is backed by a dynamic development team with lots of experience in computer science related subjects. In addition, the advisory board includes heavyweights like Zooko Wilcox from ZCash, Emin Gun Sirer, and Andrew Miller.

The success of the ICO is dependent not only on the project and its capabilities to solve real-world problems, but also the names associated with the projects. In Tezos’ case, the project has the right combination of both, which has played a pivotal role in the successful multimillion dollar crowdsale.

Ref: Futurism | Tezos Whitepaper | Image: NewsBTC