With the lead plaintiff in the proposed securities class action against the organizers of the Tezos initial coin offering asking to step aside, the San Francisco federal judge overseeing the case has tapped the runner-up in the earlier competition for the lead spot to replace him.
Initially lead plaintiff Arman Anvari, an attorney who previously practiced at Latham & Watkins, Baker McKenzie, and Perkins Coie, asked to bow out of the case earlier this year. The move came after defense lawyers at Cooley and Baker Marquart identified pseudonyms they believe Anvari adopted on social media sites which used anti-Semitic slurs in reference to Arthur and Kathleen Breitman. The Breitmans are the husband-and-wife team behind Tezos, the digital currency platform that raised $232 million in cryptocurrency for an ICO that became bogged down in technical delays, sparking a string of class action lawsuits.
Anvari’s lawyers at HGT Law and LTL Attorneys had asked to substitute a new lead plaintiff, Artiom Frunze, who claimed even more losses than the $264,007.50 worth of ether cryptocurrency Anvari allegedly had tied up in the Tezos ICO.
But on Monday, U.S. District Judge Richard Seeborg, who is overseeing the Tezos securities litigation, found that Frunze first applied for lead plaintiff outside the 60-day notice period outlined in the Private Securities Litigation Reform Act, which regulates securities cases in the federal courts.
Seeborg instead named Trigon Trading Pty. Ltd., which had the second-highest alleged losses among the initial batch of candidates, as lead plaintiff. The judge, however, allowed HGT Law’s Hung Ta, one of Anvari’s lawyers, to remain as co-lead counsel in the case alongside Trigon’s lawyers at Block & Leviton, noting that the current lead counsel had already litigated the case past a defense motion to dismiss. Seeborg wrote Monday that “in light of Anvari’s counsels’ extensive work and knowledge of the case, the class would benefit from their continued prosecution of this case.”
The judge, also on Monday, denied a defense proposal to re-open the PSLRA notice process and denied a pending class certification motion in the case, but granted leave to amend.
Neither Ta nor lawyers at Block Leviton immediately responded to messages seeking comment Monday.
Tezos’ backers were hit with class action lawsuits starting in November 2017 alleging that the blockbuster ICO, where investors prepaid for digital tokens that were expected to trade on the Tezos blockchain, violated U.S. securities laws and misled investors. Seeborg allowed the claims against the Breitmans and Dynamic Ledger Solutions, the blockchain company they co-founded, to move past a motion to dismiss in August 2018. The Tezos token, XTZ, launched the month after Seeborg’s ruling.