(Reuters) – A class-action lawsuit has been filed in a California state court against the organizers of the technology project Tezos, which in July raised $232 million in one of the largest “initial coin offerings” (ICOs) ever.
The lawsuit, filed on Oct. 25 in the California Superior Court in San Francisco, alleges that Tezos’ organizers violated U.S. securities laws and defrauded participants in the online fundraiser.
ICOs have become a popular way for technology companies to raise money by issuing new cryptocurrencies to raise capital.
Tezos, however, has yet to issue any digital coins and participants were told they were making a donation and may never receive any.
The defendants include Kathleen and Arthur Breitman, the co-founders of the project; their Delaware-based company Dynamic Ledger Solutions Inc, which owns the source code; and Strange Brew Strategies, a communications firm hired to promote the venture.
Defendants also include the Tezos Foundation, a Swiss entity that the couple helped establish to handle the ICO, and its president Johann Gevers.
Brian Klein, an attorney for the Breitmans, said the lawsuit “is without merit” and the couple “are going to aggressively defend themselves.”
The Tezos Foundation and Strange Brew declined to comment.
The other defendants did not immediately respond to requests for comment.
The lawsuit quotes extensively from a Reuters investigation published Oct. 18 that reported on a battle between the Breitmans and Gevers over control of the Tezos project.
The dispute has significantly delayed the venture, which aims to create a computerized network for transactions using blockchain technology.
The lawsuit is asking that plaintiffs receive a refund as well as damages. It alleges that the organizers sold unregistered securities.
Several other U.S. law firms have said they are investigating the Tezos ICO for possible litigation.
Reporting by Anna Irrera in New York and Steve Stecklow in London; Editing by Bernadette Baum