11 ms·

Tezos founders push for legal bailout from Swiss foundation

137 points by petethomas 9y ago

pavlov 9y ago
Tezos, the Theranos of ICOs. When you know enough rich people, you can raise a lot of money on a PDF of promises. With all the money Tezos has, they're probably going to do what Theranos did with Walgreens: pay their way into a fancy big partnership that gives the impression that there's something actually going on.
- socratesone 9y ago
  That's an easy but lazy reduction, and not accurate. - They raised from the public - Founder comp tied to release of a product that works - They are focused on making a product that works, not on optical theatrics (in fact one of their biggest weaknesses is they've been horrible at optics)
  - JetSpiegel 9y ago
    > Founder comp tied to release of a product that works Who decides what is a "product that works"?
    - Operyl 9y ago
      Probably the foundation, which is already seemingly doing a good job at managing the money (and not just throwing it to the founders willynilly).
      - literallycancer 9y ago
        The foundation is doing exactly nothing. They are not spending money on development, marketing, education, outreach, nothing. They are sitting on about a billion dollars raised for the project, and twiddling their thumbs.
  - JustAnotherPat 9y ago
    > They are focused on making a product that works, not on optical theatrics (in fact one of their biggest weaknesses is they've been horrible at optics) Is bad optics the new 'fake news' because it seems like the Breitmans have been focused on who controls the billion dollars they have.
  - staunch 9y ago
    > - They raised from the public Not quite right. They raised from their own investors and the public, which may be part of the problem. If their own investors bought into their own ICO to "seed" it, which tricked the public into thinking there was genuine demand, that might constitute fraud.
    - igorgue 9y ago
      Ummm doesn’t a regular VC founded startup that IPOs does the exact same thing? Some of them without even making money... actually loosing money!
      - jessaustin 9y ago
        If a startup never finds any paying customers, it will never IPO. The IPO is a separate step from the initial investment, governed by rules intended to protect the public. ICOs don't seem to represent anything of intrinsic value (e.g. a successful business) so the public probably faces greater danger from unscrupulous behavior.
        pavlov 9y ago
        In the biotech / pharma world, it's common for startups to IPO years before they have a single paying customer. The difference between a biotech startup and many ICOs is that the former typically has years of validated and peer-reviewed scientific research backing up the hope of eventually having a product.
        goldenkey 9y ago
        In that case, the "customers" are other scientists and drug companies that _consume_ the research, will pay for partnerships, will pay for research to be done by that lab, etc.. ICOs on the other hand don't have an acclaimed lab or anything special other than a PDF with some buzz-bullshit.
        igorgue 9y ago
        Or a startup could be paying for customers more than the customers pay them? And still IPO right? E.g.: Groupon?
- literallycancer 9y ago
  It bothers me that the top comment is a snarky dismissal from someone who doesn't have any idea what's going on. I've already learned not to expect quality discussion from HN regarding cryptocurrencies, but still, I'd like to think we can do better.
  - pavlov 9y ago
    Why don’t you write that better comment? It’s not like mine has that many upvotes (11 at current count). If you explain your position in a reasonable way with evidence, it should displace mine.
    - literallycancer 9y ago
      I could go and point out all the things you are wrong about and why. Or you could go, and do some research before commenting. It doesn't take a long time to look at a project, their code, or whatever. Or to look at the "PDF of promises", for that matter. It's even more absurd because Tezos was one of the few ICOs that had some actual technology, not just PR technobabble.
- Pyxl101 9y ago
  You know what's ironic? Tim Draper, the first investor in Theranos, is also an investor in Tezos (according to the article).
JohnnyConatus 9y ago
In other words, they tried to be clever in their structuring and now it's biting them in the ass. Hoisted by their own petard.
stoev 9y ago
I know that ICOs get a lot of negativity on HN. Sure, a lot of them deserve it, but not all ICOs are started for the sole purpose of raising cash that they otherwise wouldn't be able to raise. ICOs as a form of funding are equally likely to be manipulated as traditional VC funding following trends and hypes (one might argue that they ICO investors are even more gullible to dishonest founders since they are generally less experienced than VCs). However, certain ICOs are actually bringing products to market that would never otherwise exist. Some of them are trying to fundamentally change how some industries operate. Others are fundamentally improving blockchain technology. But in order for their products to operate they need enough stakeholders to make them viable. And this is where ICOs come in. There were many of us who believed that Tezos was one of those ICOs. Their product could still be greatly useful if executed correctly. Given that they have raised more money then they could ever have hoped for, it is incredible that they are being silly enough to embark on a public dispute between themselves and get involved in lawsuits with their investors. Just getting back to work and executing their initial vision (which they can do many times over with that amount of funds) seems like an obvious thing to do. They would lose a lot more money (or worse) by continuing on this trajectory. It is incredible how short-term greedy they seem from the outside. Or maybe I am missing some information that would explain this stupidity. I would love to know more.
- fiatjaf 9y ago
  I can't remember a single ICO that has brought anything useful to the market yet. You can say Ethereum, but it wasn't an ICO properly speaking. Even if it was, a single good example in hundreds isn't enough. Ripple didn't have an ICO, Bitcoin Cash didn't, Zcash didn't, Monero didn't, Stellar didn't.
  - ashnyc 9y ago
    zrcoin did. the market is still young but it can be a powerful tool where traditional VC are not present.
  - socratesone 9y ago
    Wabi seems to be doing it right: https://www.wacoin.io/ https://www.wacoin.io/
nerdponx 9y ago
So what exactly happened here? There was an ICO for a big new smart-contract blockchain with some cool features, and the blockchain never materialized?
- socratesone 9y ago
  It was a project that was and continues to be promising from a development and utility standpoint, but that has been marred by terrible governance, internal politics, and amateurish management
  - nihonde 9y ago
    And worst of all, their product is about improving governance. Not a promising start.
    - Mtinie 9y ago
      In fairness, the foundation arm of the token's development appears to be operating in a reasonable and pragmatic way along their planned roadmap. It is a related company, helmed by the previous "frontpeople" for the project that has run into significant bumps and legal jeopardy. Whether or not that means that the project will ultimately release, I have no idea (nor vested interest in).
      - literallycancer 9y ago
        >the foundation arm of the token's development appears to be operating in a reasonable and pragmatic way along their planned roadmap Oh, yes? What have they done?
  - charlesdm 9y ago
    Read: it's a shit show across the board
fiatjaf 9y ago
Can someone explain briefly the Tezos unique features and why would someone want it? In my understanding it is just a Bitcoin copy that has a voting feature to decide protocol changes.
- berberous 9y ago
  In addition to on-chain governance you mention (i.e. the built-in voting features to decide protocol changes and avoid the civil war that's going on in Bitcoin world), they use a functional programming language that is supposed to be much safer and easier to code than the Ethereum language.
  - flunhat 9y ago
    Why not just write a compiler for that functional language (I think OCaml) that outputs EVM bytecode? Seems very doable from afar...
    - hackinthebochs 9y ago
      No one's yet figured out how to ICO a compiler.
      - fiatjaf 9y ago
        ahahahah
    - igorgue 9y ago
      Tezos itself is written in OCaml: https://github.com/tezos/tezos https://github.com/tezos/tezos So what you say is exactly what they did but to their chain not EVM.
      - flunhat 9y ago
        I know, I was referring to that in my post. My question is why it required their own chain. Ethereum's is open source, so more bytecodes and functionality could be added to the EVM to make it appropriate for safer languages to compile down to it. I suspect the reason Tezos didn't do that is because they wanted to cash in on the hype.
crispytx 9y ago
Suckers.
touchofevil 9y ago
If you like the idea of Tezos, have a look at Cardano. It has on-chain governance voting, formal verification, and the ability to upgrade the protocol without the need for hard forks. Basically, all the stuff that got me interested in the Tezos project. https://www.cardanohub.org/en/what-is-cardano/ https://www.cardanohub.org/en/what-is-cardano/ In the interest of full disclosure, I do own some Cardano.
- isubkhankulov 9y ago
  Thanks for the full disclosure. Good luck with your investment but the comments section for this article is probably not a good place to pump coins.
  - touchofevil 9y ago
    I don't think that letting people who are interested in Tezos know about a coin with very similar features is "pumping" the currency. Tezos has some really interesting features, but they have stumbled with the ICO and delayed their release. As someone who was waiting for Tezos to launch I was excited to hear about Cardano and I'm sure there are other Tezos enthusiasts here who are happy to learn about the existence of similar coin. To say that I'm "pumping" the coin implies that I will dump the coin, when I'm really just interested in the Tezos technology, which is also present in Cardano.
- jameskegel 9y ago
  I love what IOHK have been doing with Cardano. There are lots of really notable faces[1] and institutions working on this project, and I'm excited to see what they bring to the Haskell and greater mathematics communities. Here is a good whiteboard summary of Cardano[2], by Charles Hoskinson, who is co-creator of Ethereum as well as Cardano and other associated notable works. [1] - https://iohk.io/team/ https://iohk.io/team/ [2] - https://www.youtube.com/watch?v=Ja9D0kpksxw https://www.youtube.com/watch?v=Ja9D0kpksxw
  - literallycancer 9y ago
    >by Charles Hoskinson, who is co-creator of Ethereum as well as Cardano and other associated notable works. As it happens, he's also the creator or Ethereum Classic, a hard fork of Ethereum, not unlike what Bcash is to Bitcoin (i.e. an attempt at co-opting the brand and capturing value by confusing newcomers). Apparently he tried to inflate the ETC coin supply by 20% and give the new coins to his company IOHK, which of course didn't sit well with the ETC community: https://medium.com/@classicether/an-analysis-of-charles-hoskinsons-apology-letter-22f6fdceb796 https://medium.com/@classicether/an-analysis-of-charles-hosk...
ggg9990 9y ago
$257 million? Who are the morons keeping this hamster wheel spinning?
- laxatives 9y ago
  That's pre Bitcoin inflation. Its probably valued over a billion USD now, assuming they kept a decent chunk of the BTC in BTC.
jasonmcalacanis 9y ago
1. ICO founders are getting a quick education in the fact that "anyone can sue anyone at any time" -- no matter what paperwork you have folks sign. 2. What are the damages if they just give the money/coins back? That's the easiest solution for these ICOs: a 100 days buy back/escrow period? 3. Another easy solution is to have these ICOs hold the proceeds in escrow and release of funds quarterly for five years to the startups/projects and giving the investors the ability to refund half or 75% of their remaining commitment (i.e. a 25-50% penalty for leaving the project early). had the founder on recently https://youtu.be/rdRSUJkvmxM https://youtu.be/rdRSUJkvmxM -- seems like people who invested knew what they were doing going in.
- pdog 9y ago
  > ICO founders are getting a quick education... It's not fun for them, but after raising a couple of hundred million dollars, I don't feel too sorry for them either.
- paulsutter 9y ago
  Video is a great background on Tezos, why they chose a Swiss foundation in Zug, how the money is budgeted, how they chose the trustees for the foundation, the token presale, etc
  - jasonmcalacanis 9y ago
    my podcast is a complete front for me figuring out if i should invest in startups. :-) just had coinlist on the show as well.... they did filecoin's $200m+ ICO http://thisweekinstartups.com/andy-bromberg-coinlist/ http://thisweekinstartups.com/andy-bromberg-coinlist/
    - nivertech 9y ago
      Wow! I think you need a dedicated podcast called "This week in ICOs" or "This week in crypto" ;)
    - pdog 9y ago
      They say if you want to master something, teach it. Looking forward to more crypto-focused podcasts. It's always preferable to hear from more technical guests who aren't just trying to sell something.
brianbreslin 9y ago
So what's the likelihood my pre-sale in tezos ever gets returned or turned into a viable coin?
MichaelAO 9y ago
The Bitcoin Uncensored interview with Arthur Breitman is interesting to watch: https://www.youtube.com/watch?v=gsY5wXj4Xm8 https://www.youtube.com/watch?v=gsY5wXj4Xm8
- xorcist 9y ago
  It was a very interesting interview, mostly for the parts that weren't about Tezos. Breitman explains the use case for Turing complete smart contracts: Spending limits. Everything else can be implemented by m-of-n multisig and off-chain oracles. This is something anyone about to invest in smart contract technology should think long and hard about.
  - runeks 9y ago
    > Breitman explains the use case for Turing complete smart contracts: Spending limits. Does he have a good explanation for this? Because I fail to see how something as simple as spending limits requires Turing completeness.

137 points by petethomas 9y ago

Tezos, the Theranos of ICOs. When you know enough rich people, you can raise a lot of money on a PDF of promises. With all the money Tezos has, they're probably going to do what Theranos did with Walgreens: pay their way into a fancy big partnership that gives the impression that there's something actually going on.

socratesone 9y ago
That's an easy but lazy reduction, and not accurate. - They raised from the public - Founder comp tied to release of a product that works - They are focused on making a product that works, not on optical theatrics (in fact one of their biggest weaknesses is they've been horrible at optics)
- JetSpiegel 9y ago
  > Founder comp tied to release of a product that works Who decides what is a "product that works"?
  - Operyl 9y ago
    Probably the foundation, which is already seemingly doing a good job at managing the money (and not just throwing it to the founders willynilly).
    - literallycancer 9y ago
      The foundation is doing exactly nothing. They are not spending money on development, marketing, education, outreach, nothing. They are sitting on about a billion dollars raised for the project, and twiddling their thumbs.
- JustAnotherPat 9y ago
  > They are focused on making a product that works, not on optical theatrics (in fact one of their biggest weaknesses is they've been horrible at optics) Is bad optics the new 'fake news' because it seems like the Breitmans have been focused on who controls the billion dollars they have.
- staunch 9y ago
  > - They raised from the public Not quite right. They raised from their own investors and the public, which may be part of the problem. If their own investors bought into their own ICO to "seed" it, which tricked the public into thinking there was genuine demand, that might constitute fraud.
  - igorgue 9y ago
    Ummm doesn’t a regular VC founded startup that IPOs does the exact same thing? Some of them without even making money... actually loosing money!
    - jessaustin 9y ago
      If a startup never finds any paying customers, it will never IPO. The IPO is a separate step from the initial investment, governed by rules intended to protect the public. ICOs don't seem to represent anything of intrinsic value (e.g. a successful business) so the public probably faces greater danger from unscrupulous behavior.
      - pavlov 9y ago
        In the biotech / pharma world, it's common for startups to IPO years before they have a single paying customer. The difference between a biotech startup and many ICOs is that the former typically has years of validated and peer-reviewed scientific research backing up the hope of eventually having a product.
        goldenkey 9y ago
        In that case, the "customers" are other scientists and drug companies that _consume_ the research, will pay for partnerships, will pay for research to be done by that lab, etc.. ICOs on the other hand don't have an acclaimed lab or anything special other than a PDF with some buzz-bullshit.
      - igorgue 9y ago
        Or a startup could be paying for customers more than the customers pay them? And still IPO right? E.g.: Groupon?
literallycancer 9y ago
It bothers me that the top comment is a snarky dismissal from someone who doesn't have any idea what's going on. I've already learned not to expect quality discussion from HN regarding cryptocurrencies, but still, I'd like to think we can do better.
- pavlov 9y ago
  Why don’t you write that better comment? It’s not like mine has that many upvotes (11 at current count). If you explain your position in a reasonable way with evidence, it should displace mine.
  - literallycancer 9y ago
    I could go and point out all the things you are wrong about and why. Or you could go, and do some research before commenting. It doesn't take a long time to look at a project, their code, or whatever. Or to look at the "PDF of promises", for that matter. It's even more absurd because Tezos was one of the few ICOs that had some actual technology, not just PR technobabble.
Pyxl101 9y ago
You know what's ironic? Tim Draper, the first investor in Theranos, is also an investor in Tezos (according to the article).

JohnnyConatus 9y ago

In other words, they tried to be clever in their structuring and now it's biting them in the ass. Hoisted by their own petard.

stoev 9y ago

I know that ICOs get a lot of negativity on HN. Sure, a lot of them deserve it, but not all ICOs are started for the sole purpose of raising cash that they otherwise wouldn't be able to raise. ICOs as a form of funding are equally likely to be manipulated as traditional VC funding following trends and hypes (one might argue that they ICO investors are even more gullible to dishonest founders since they are generally less experienced than VCs). However, certain ICOs are actually bringing products to market that would never otherwise exist. Some of them are trying to fundamentally change how some industries operate. Others are fundamentally improving blockchain technology. But in order for their products to operate they need enough stakeholders to make them viable. And this is where ICOs come in. There were many of us who believed that Tezos was one of those ICOs. Their product could still be greatly useful if executed correctly. Given that they have raised more money then they could ever have hoped for, it is incredible that they are being silly enough to embark on a public dispute between themselves and get involved in lawsuits with their investors. Just getting back to work and executing their initial vision (which they can do many times over with that amount of funds) seems like an obvious thing to do. They would lose a lot more money (or worse) by continuing on this trajectory. It is incredible how short-term greedy they seem from the outside. Or maybe I am missing some information that would explain this stupidity. I would love to know more.

fiatjaf 9y ago
I can't remember a single ICO that has brought anything useful to the market yet. You can say Ethereum, but it wasn't an ICO properly speaking. Even if it was, a single good example in hundreds isn't enough. Ripple didn't have an ICO, Bitcoin Cash didn't, Zcash didn't, Monero didn't, Stellar didn't.
- ashnyc 9y ago
  zrcoin did. the market is still young but it can be a powerful tool where traditional VC are not present.
- socratesone 9y ago
  Wabi seems to be doing it right: https://www.wacoin.io/ https://www.wacoin.io/

nerdponx 9y ago

So what exactly happened here? There was an ICO for a big new smart-contract blockchain with some cool features, and the blockchain never materialized?

socratesone 9y ago
It was a project that was and continues to be promising from a development and utility standpoint, but that has been marred by terrible governance, internal politics, and amateurish management
- nihonde 9y ago
  And worst of all, their product is about improving governance. Not a promising start.
  - Mtinie 9y ago
    In fairness, the foundation arm of the token's development appears to be operating in a reasonable and pragmatic way along their planned roadmap. It is a related company, helmed by the previous "frontpeople" for the project that has run into significant bumps and legal jeopardy. Whether or not that means that the project will ultimately release, I have no idea (nor vested interest in).
    - literallycancer 9y ago
      >the foundation arm of the token's development appears to be operating in a reasonable and pragmatic way along their planned roadmap Oh, yes? What have they done?
- charlesdm 9y ago
  Read: it's a shit show across the board

fiatjaf 9y ago

Can someone explain briefly the Tezos unique features and why would someone want it? In my understanding it is just a Bitcoin copy that has a voting feature to decide protocol changes.

berberous 9y ago
In addition to on-chain governance you mention (i.e. the built-in voting features to decide protocol changes and avoid the civil war that's going on in Bitcoin world), they use a functional programming language that is supposed to be much safer and easier to code than the Ethereum language.
- flunhat 9y ago
  Why not just write a compiler for that functional language (I think OCaml) that outputs EVM bytecode? Seems very doable from afar...
  - hackinthebochs 9y ago
    No one's yet figured out how to ICO a compiler.
    - fiatjaf 9y ago
      ahahahah
  - igorgue 9y ago
    Tezos itself is written in OCaml: https://github.com/tezos/tezos https://github.com/tezos/tezos So what you say is exactly what they did but to their chain not EVM.
    - flunhat 9y ago
      I know, I was referring to that in my post. My question is why it required their own chain. Ethereum's is open source, so more bytecodes and functionality could be added to the EVM to make it appropriate for safer languages to compile down to it. I suspect the reason Tezos didn't do that is because they wanted to cash in on the hype.

crispytx 9y ago

Suckers.

touchofevil 9y ago

If you like the idea of Tezos, have a look at Cardano. It has on-chain governance voting, formal verification, and the ability to upgrade the protocol without the need for hard forks. Basically, all the stuff that got me interested in the Tezos project. https://www.cardanohub.org/en/what-is-cardano/ https://www.cardanohub.org/en/what-is-cardano/ In the interest of full disclosure, I do own some Cardano.

isubkhankulov 9y ago
Thanks for the full disclosure. Good luck with your investment but the comments section for this article is probably not a good place to pump coins.
- touchofevil 9y ago
  I don't think that letting people who are interested in Tezos know about a coin with very similar features is "pumping" the currency. Tezos has some really interesting features, but they have stumbled with the ICO and delayed their release. As someone who was waiting for Tezos to launch I was excited to hear about Cardano and I'm sure there are other Tezos enthusiasts here who are happy to learn about the existence of similar coin. To say that I'm "pumping" the coin implies that I will dump the coin, when I'm really just interested in the Tezos technology, which is also present in Cardano.
jameskegel 9y ago
I love what IOHK have been doing with Cardano. There are lots of really notable faces[1] and institutions working on this project, and I'm excited to see what they bring to the Haskell and greater mathematics communities. Here is a good whiteboard summary of Cardano[2], by Charles Hoskinson, who is co-creator of Ethereum as well as Cardano and other associated notable works. [1] - https://iohk.io/team/ https://iohk.io/team/ [2] - https://www.youtube.com/watch?v=Ja9D0kpksxw https://www.youtube.com/watch?v=Ja9D0kpksxw
- literallycancer 9y ago
  >by Charles Hoskinson, who is co-creator of Ethereum as well as Cardano and other associated notable works. As it happens, he's also the creator or Ethereum Classic, a hard fork of Ethereum, not unlike what Bcash is to Bitcoin (i.e. an attempt at co-opting the brand and capturing value by confusing newcomers). Apparently he tried to inflate the ETC coin supply by 20% and give the new coins to his company IOHK, which of course didn't sit well with the ETC community: https://medium.com/@classicether/an-analysis-of-charles-hoskinsons-apology-letter-22f6fdceb796 https://medium.com/@classicether/an-analysis-of-charles-hosk...

ggg9990 9y ago

$257 million? Who are the morons keeping this hamster wheel spinning?

laxatives 9y ago
That's pre Bitcoin inflation. Its probably valued over a billion USD now, assuming they kept a decent chunk of the BTC in BTC.

jasonmcalacanis 9y ago

1. ICO founders are getting a quick education in the fact that "anyone can sue anyone at any time" -- no matter what paperwork you have folks sign. 2. What are the damages if they just give the money/coins back? That's the easiest solution for these ICOs: a 100 days buy back/escrow period? 3. Another easy solution is to have these ICOs hold the proceeds in escrow and release of funds quarterly for five years to the startups/projects and giving the investors the ability to refund half or 75% of their remaining commitment (i.e. a 25-50% penalty for leaving the project early). had the founder on recently https://youtu.be/rdRSUJkvmxM https://youtu.be/rdRSUJkvmxM -- seems like people who invested knew what they were doing going in.

pdog 9y ago
> ICO founders are getting a quick education... It's not fun for them, but after raising a couple of hundred million dollars, I don't feel too sorry for them either.
paulsutter 9y ago
Video is a great background on Tezos, why they chose a Swiss foundation in Zug, how the money is budgeted, how they chose the trustees for the foundation, the token presale, etc
- jasonmcalacanis 9y ago
  my podcast is a complete front for me figuring out if i should invest in startups. :-) just had coinlist on the show as well.... they did filecoin's $200m+ ICO http://thisweekinstartups.com/andy-bromberg-coinlist/ http://thisweekinstartups.com/andy-bromberg-coinlist/
  - nivertech 9y ago
    Wow! I think you need a dedicated podcast called "This week in ICOs" or "This week in crypto" ;)
  - pdog 9y ago
    They say if you want to master something, teach it. Looking forward to more crypto-focused podcasts. It's always preferable to hear from more technical guests who aren't just trying to sell something.

brianbreslin 9y ago

So what's the likelihood my pre-sale in tezos ever gets returned or turned into a viable coin?

MichaelAO 9y ago

The Bitcoin Uncensored interview with Arthur Breitman is interesting to watch: https://www.youtube.com/watch?v=gsY5wXj4Xm8 https://www.youtube.com/watch?v=gsY5wXj4Xm8

xorcist 9y ago
It was a very interesting interview, mostly for the parts that weren't about Tezos. Breitman explains the use case for Turing complete smart contracts: Spending limits. Everything else can be implemented by m-of-n multisig and off-chain oracles. This is something anyone about to invest in smart contract technology should think long and hard about.
- runeks 9y ago
  > Breitman explains the use case for Turing complete smart contracts: Spending limits. Does he have a good explanation for this? Because I fail to see how something as simple as spending limits requires Turing completeness.