The proceeds from Tezos' record initial coin offering have surged, but bitter infighting has broken out among its backers. The head of a Swiss foundation meant to govern Tezos' assets could come up the big winner, finews.com reports.

Tezos founder Arthur Breitman (pictured below) was in good humor when he detailed his digital currency to a fintech audience in Zurich last week.

Arthur Breitman

The mood changed when a listener probed him about the hundreds of millions of Swiss francs from a July initial coin offering, which are now blocked. Breitman deferred the question an all related financial ones to a Zug-based foundation set up this spring to govern the proceeds. He declined to respond to finews.com when asked about the fight.

Accusations Fly

His reticence lays bare that the dispute between Tezos' authors, Arthur and Kathleen Breitman, and the president of a Swiss foundation for Tezos, Johann Gevers, is one for the lawyers.

The Breitmans face three separate class-action lawsuits in the U.S.: disgruntled investors don't agree that the «Tezzie» coin be classified as a donation towards its development and future launch, and not a securities investment.

The Franco-American couple accuse Gevers of failing to adequately promote the project. They also say he wanted to smuggle a large bonus for himself past the other foundation overseers, Guido Schmitz-Krummenacher and Diego Ponz.

$820 Million Tezos Pot

As Breitman works with a Paris-based development team to launch the Tezzie, a Swiss auditor has conducted a review of the foundation. The results will be presented to Gevers and the other two foundation board members to decide the next steps, according to a statement.

Tezos is a minefield of structures, vehicles, murky governance and elaborate contracts. The fight is, of course, not about the promising Tezos technology, which wants to eventually replace the Ethereum network – instead, it is about money.

July's ICO took in a record-breaking $232 million, of which the Breitmans are set to skim a whopping 8.5 percent – or nearly $20 million – off the top, as finews.com reported in August.

Gevers In Control

Because the ICO contributors paid up mainly in bitcoin or ether, the assets held by the foundation have skyrocketed alongside a surge in the cryptocurrencies in recent months. They now stand at $820 million, meaning the Breitmans are in line for $70 million. But the pile, now partly converted into cash, is controlled by their archenemy, Gevers.

His control also extends to brainpower behind the Tezzie: the Breitmans signed a pact to eventually transfer the intellectual property and business ties behind the technology from their Delaware-based firm to the foundation. The only requirement? Tezos needs to be operational for at least three months. In return, the Tezos foundation is required to publish the blockchain protocols underpinning the technology.

Set Own Trap?

The Breitmans, in an effort to mitigate risk for the Tezos foundation, may have inadvertently laid a trap for themselves. The foundation was set up in Zug's crypto valley, in order to avoid too much regulatory scrutiny. The problem? In doing so, they relinquished almost all control of the foundation.

Gevers controls the Tezos millions. He is also at leisure to wait out the Tezos blockchain project before taking control of the project himself – a scenario that is making the rounds in crypto valley.

Disgruntled Ex-Partners

The foundation head is in a peculiar situation: his own digital currency start-up, Monetas, has foundered. More importantly, the way the South African-born Gevers buried the project did little to endear him to the close-knit fintech community. Previous employees and investors accuse him of neglecting Monetas in favor of the more promising Tezos, without disclosing the potential conflict of interest.

«Gevers made lots of promises and kept very few of them,» an ex-Monetas employee and co-investor told finews.com.

«Nothing Unethical»

Reached by finews.com, Gevers said he had always acted with transparency, and denied a conflict of interest between Monetas and Tezos. «I haven't done anything unethical, either at Monetas or Tezos. The opposite is true,» he said.

Gevers declined to elaborate, and didn't comment on potenial solutions to the feud with the Breitmans. Clearly, the Tezos dispute has taken a toll on the entire cryptocurrency screen. The headlines surrounding the project have drawn attention from global regulators, including Switzerland's Finma.

Phoenix from Ashes?

Mark Branson, who runs the Bern-based regulator, signalled vigilance in an interview earlier this week. Finma has already taken at least one coin scheme out of circulation.

Last week in Zurich, Arthur Breitman didn't give the impression that he will abandon the Tezos project easily. This plays into Gevers' hands: if he can keep control of the foundation, he could be poised to rise from the ashes of the Tezos dispute.

(http://www.autoadmit.com/thread.php?thread_id=3819227&forum_id=7#34848352)