The once-celebrated Tezos project is unraveling. After raising a record-breaking $250 million in a summer 2017 ICO, the blockchain startup is now mired in three class-action lawsuits, a bitter power struggle between its founders and the foundation president, and a growing crisis of confidence. The latest blow: board member Guido Schmitz-Krummacher has resigned, leaving the foundation with only two directors — while its bylaws require a three-member board.
Power Vacuum at the Foundation
The Tezos Foundation holds the ICO funds, while the project's source code is owned by founders Kathleen Breitman and Arthur Breitman through their company Dynamic Ledger Solutions (DLS). Foundation president Johann Gevers is locked in a fight with the Breitmans over control and direction. Schmitz-Krummacher's exit creates a decisive 2-2 split, but per foundation rules, Gevers has the final say in appointing a replacement: if the third member votes against the candidate, Gevers can cast an overriding vote. This gives Gevers enormous power and exacerbates tensions.
According to Reuters, Schmitz-Krummacher resigned “because he was frustrated by the infighting, which was consuming a lot of his time.” He is a well-respected figure in Swiss professional circles and Managing Partner of Finance, Legal and PR at Talentory GmbH. His departure leaves the community worried that the project will stall completely.
Tokens Delayed, Investors Anxious
ICO contributors have yet to receive their Tezzies tokens. The promised token distribution has been delayed repeatedly due to boardroom battles. The raised funds — originally in ether and bitcoin — remain largely untouched, while the Breitmans want to use part of them to pay mounting legal expenses. Notably, both cryptocurrencies have appreciated significantly since the ICO, making the foundation's holdings far more valuable than the initial $250 million.
Tezos is also facing at least three class-action lawsuits alleging violations of federal securities laws and that “the fundraiser defrauded participants, who were told they were making non-refundable donations.” Reuters notes the lawsuits seek refunds and damages. The Breitmans, as code holders, are also defendants.
Community Petition Demands Gevers' Removal
Frustrated by the infighting and project delays, the Tezos community has launched an online petition accusing Gevers of improprieties and demanding his removal. “The community is looking forward to rebuilding confidence in the Foundation upon Mr. Gevers’ departure,” the petition states. It has collected over 1,000 signatures at press time. However, Gevers' ouster remains uncertain given the bylaws.
Tezos was once seen as a star of the ICO era, with its innovative on-chain governance mechanism. But now, infighting, lawsuits, and community anger are eroding its future. The outcome of this power struggle is still unclear.