Cryptocurrency
The Drama of Tezos: A Tale Every Crypto Enthusiast Should Know About
Tezos was the largest and most-hyped ICO of 2017. Founded by an intelligent young couple named Arthur and Kathleen Breitman, the idea of Tezos governance was attractive to thousands of investors. After raising around $250 million in BTC and ETH, the project looked as if it couldn’t fail. (Currently, that amount has appreciated to around […]
Tezos was the largest and most-hyped ICO of 2017. Founded by an intelligent young couple named Arthur and Kathleen Breitman, the idea of Tezos governance was attractive to thousands of investors. After raising around $250 million in BTC and ETH, the project looked as if it couldn’t fail. (Currently, that amount has appreciated to around half a billion USD). After a series of unfortunate events, Tezos is in the process of resolving 4 class action lawsuits.
What led Tezos to such an asinine decline?
Initially, the appeal of Tezos was derived from their innovative governance structure. The plan was to reward open source developers with ‘Tezzies’. Anyone could contribute to the Tezos project and if the community voted to implement the proposed code the contributors would be awarded with Tezzies. The hope was that this reward structure would incentivize some of the most brilliant programmers to contribute. The concept was ideal, and with prominent investors such as Tim Draper backing the project, the future seemed limitless.
The funds raised were received by the Tezos Foundation, this approach was favorable as most cryptocurrencies have foundations. The Breitmans did not want to run the Tezos foundation because they wanted it to remain separate from its founders. The intent was to make the foundation more transparent, more trustworthy, and not reliant upon a central founder. The concept was clear, and so the Breitmans appointed Johann Gevers to run the foundation.
This arrangement soon became problematic. With Gevers now controlling the foundation he controlled 100% of the funds, and thus held the majority of the power. Shortly after, much of the Tezos community became unsatisfied with Gevers leadership decisions. Gevers was hard to reach, very few knew what he was actually doing during the day. He exhibited an annoying trait of obsessing over every dollar saved. As a result, he told the founders they couldn’t eat on airline flights because the food was too expensive. While, in turn he bought an unnecessary personal office at the expense of the Tezos foundation. Gevers also hired some of his friends rather than building the foundation with competent individuals.
After the Breitmans learned of these destructive decisions, they soon had a falling out with Gevers. As a response, ‘the Breitmans sent a 46-page letter to the Foundation’s two other board members, calling for Gevers’ prompt removal and seeking to give the couple a “substantial role” in a new structure that would limit the foundation’s responsibilities.’ The Breitmans did not handle the PR well, and the report was publicly exposed through a painfully detailed article in Reuters. The Breitmans’ also claimed that Gevers attempted to bribe the other two board members with a bonus of $1.5 million each. Regardless if the back-and-forth claims were true, the collective negative PR was arguably detrimental to the reputation of Tezos.
Johann Gevers eventually stepped down and the foundation continues to operate. However, Tezos PR still remains somewhat unpopular as they continue to deal with lawsuits and audits.
According to a Cointelegraph article,
“In April, Tezos Arthur Breitman was fined $20,000 by U.S. regulators and banned from broker activity until 2020 because he failed to disclose Tezos-related “outside business activities” while working for Morgan Stanley to Wall Street’s Financial Industry Regulatory Authority (FINRA).”
With controversy surrounding it, Tezos continues to develop. On June 30th, the foundation announced the launch of their beta net. The genesis block of the network was executed and the network continues to process transactions. While the launch comes months after it was originally promised, it’s better late than never. Overall, the tale of Tezos is filled with irony as its initial appeal of innovative governance became interrupted by internal governance conflicts.
For sources and additional information:
https://www.wired.com/story/tezos-blockchain-love-story-horror-story/
Disclaimer: This is not financial advice. Please do your own research and make objective decisions. Please do your own due diligence. This article is intended to educate readers about the past year of Tezos. The author of the article owns cryptocurrency. The author has no positions in Tezos.