Tezos (XTZ)–Tezos, the controversial cryptocurrency project that seems to be stuck in perpetual limbo, has finally updated investors by way of announcing the launch of their “Betanet.” Hailed as a significant milestone in the development of the project, the official press release by the Tezos Foundation labels June 30th as the creation of the genesis block for the beta network,
The Tezos Foundation is thrilled to announce that the Tezos betanet is live. Today, we proposed a genesis block that is now the seed of a beta network. Validation (“baking”) has commenced and transactions may now be processed.
While users of Tezos can connect to the betanet and begin “baking”–Tezos’s term for community members who help validate the protocol–after the first seven cycles are completed (estimated to take three weeks), no block rewards will be issued at this time.
Tezos is careful to remind investors and network participants that they are not responsible for the security measures associated with the betanet, and that the general rules of cryptocurrency apply (i.e. don’t share your private keys with strangers; nothing can be done if funds are stolen via breaches in this privacy). Tezos also reminds investors in the update that the growth of the currency, akin to all decentralized projects, is in the hands of the community base. While members of the record-breaking ICO buy in may not be pleased to hear the company offloading growth responsibility onto the community, the point remains: decentralized protocols are designed to be bottom-up driven.
The future of Tezos rests in the hands of its community. This moment marks an inflection point for the project, and we are excited to support community developers, scientists, validators (“bakers”), and enthusiasts from all over the world as they drive the success of this innovative, decentralized network.
Legal Troubles for Tezos
Tezos has had a controversial build up to 2018, making headlines last July with a record-breaking ICO. The initial coin offering for Tezos raised 232 million USD, thereby adding to the lure surrounding the popular method for cryptocurrency fundraising–and drawing the attention of regulatory bodies as to the legality of ICOs. Since raising the capital, Tezos has had to contend with multiple class action lawsuits surrounding the method in which funds were collected. Tezos was sold to investors as a security, despite the company failing to undertake or receive SEC approval beforehand, in addition to neglecting the proper vetting process for would-be buyers. The lawsuits claim that the parent company behind Tezos purposefully attempted to mislead investors in regards to the nature of the investment.
In February, the U.S. Securities and Exchange Commission refused a Freedom of Information Act request by David Silver, attorney for the plaintiffs in the case, to uncover more information regarding the Tezos project. While ICOs have traditionally operated in murky legal waters, Tezos is being pursued for its deliberate presentation as a security, thereby being held to specific guidelines laid forth by the SEC.
In addition, investors have become more impatient with the project after a number of delays, particularly in releasing the tokens following the ICO. Tezos is also contending with fallout between co-founders Arthur and Kathleen Breitman, who own the intellectual rights for Tezos, and the board president of the Tezos Foundation, Johann Gevers.
While time will tell how things play out for the project, Tezos is becoming the poster child for what can go wrong with an ICO that has so much initial hype and promise. This Medium post by Crypto Reviewer outlines how the community of cryptocurrency can learn from the experience of Tezos and hold more accountability to the ICO market.