Lawyers for the organizers of Tezos' first coin offering claim that lead plaintiff Arman Anvari, an attorney, has “a long and ugly history of racist, anti-Semitic and homophobic statements against the parties and others” and that he has taken actions that could torpedo the lawsuit.
In court papers filed Thursday, lawyers for Cooley and Baker Marquart identified pseudonyms they believe Anvari used on social media sites that used anti-Semitic slurs in reference to Arthur and Kathleen Breitman, the couple behind Tezos, a digital currency platform in development.
Perhaps even more problematic for the plaintiff's case, however, is that the Breitmans' lawyers allege that Anvari offered to buy out other investors' positions in the long-delayed initial coin offering at the price they would have paid for them – a fact they claim undermines the position of investors like Anvari were damaged by the initial coin offering. They also say he posted online that blockchain-based tokens were not securities – a statement that runs counter to the entire theory underlying the lawsuit.
The filing comes as HGT Law and LTL Attorneys, lead attorneys in the lawsuit, asked in late January to replace Anvari with a new lead plaintiff and move forward with class certification in the landmark case.
“Mr Anvari has asked the court for permission to withdraw from the lawsuit and he will no longer participate in the lawsuit at this time. Neither party objects to his withdrawal,” lead plaintiff attorney Hung Ta said in an email statement. “A number of other individuals have now come forward to step in as lead plaintiff. We are strongly focused on assisting the court in this proceeding and further advancing the claims against Tezos for the benefit of our class members.”
Ta declined to answer a follow-up question about Anvari's alleged posts.
In an emailed statement, Anvari said that while he no longer wanted to be involved in the litigation, he disputed “the defendants' malicious and unfounded attacks on my character and their claims that I am hateful toward any group of people.” .
Tezos backers have faced a series of class-action lawsuits since November 2017, accusing them of blockbuster $232 million initial coin offering – in which investors prepaid for digital tokens sold on the Tezos blockchain was supposed to be traded, which was blocked by technical delays – the company violated US securities laws and misled investors.
U.S. District Judge Richard Seeborg appointed Anvari as lead plaintiff in March last year after former Latham & Watkins employees Baker McKenzie and Perkins Coie invested $264,007.50 worth of the cryptocurrency Ether in Tezos' planned initial coin offering had. Seeborg later dismissed allegations that Breitmans and Dynamic Ledger Solutions, the blockchain company they co-founded, violated U.S. securities laws against a motion to dismiss.
Attorneys for Cooley and Baker Marquart were not immediately available for comment Friday.
In the defendants' statement of claim filed Thursday, the Breitmans' attorneys argue that the plaintiffs should not be allowed to replace Anvari and focus on class certification. Defense attorneys believe that Anvari was most likely aware of the “terms and conditions” of the Tezos token offering, which stipulated that all Tezos-related disputes would be heard in Switzerland under Swiss law.
“In addition, Anvari’s Internet posts also contained numerous racist, homophobic and anti-Semitic insults, some of which were even directed against those involved in the Tezos project and other defendants,” the defense attorneys wrote, without detailing the alleged connections between Anvari and the company pseudonymous online posts that quote them.
In particular, defense attorneys point to a post in an exchange on the law school message board autoadmit.com written by someone with the username “.,.,.,,,.,.,.,.,,.,” . .,.,.,.,,.,.,.,,” who they claim is actually Anvari. According to the filing, this user wrote a post that read, “F*CK the Breitkikes,” in a obviously anti-Semitic reference to the Breitmans.
Anvari did not address the social media posts in a statement filed with the motion to have him removed from the lawsuit. However, he wrote, “Based on various legal arguments that defendants intend to make, I believe that I cannot adequately represent the putative class and have instructed my attorneys to request my withdrawal as lead plaintiff.”
In Thursday's filing, defense attorneys asked Seeborg to reconsider the question of who should be lead plaintiff. They contend that a plaintiff Anvari's lawyers sought to represent is Australian and may not have standing to bring claims under U.S. securities laws. They also claim that they should be able to find out whether the new proposed plaintiffs were aware of the “terms and conditions” of the ICO offerings that moved disputes to Switzerland.
Meanwhile, one of the plaintiffs, who came second in the race to become lead plaintiff in the case, is calling on Seeborg to reconsider his earlier decision.
“If Anvari cannot serve as lead plaintiff, the PSLRA does not authorize its attorneys to select one
Replacement,” wrote the Block & Leviton attorney, representing an Australian company called Trigon Trading, which had the next highest level of alleged losses. “Instead, the Court must turn to the next best plaintiff who has timely filed a motion for appointment.” Lead Plaintiff. This plaintiff is Trigon.
Block & Leviton's lawyers say in the footnote that their client “can and will testify that he did not see the terms of the contribution before the purchase.” However, Trigon's filing did not address the defense's arguments regarding the extraterritorial reach of U.S. securities laws.
Joel Fleming and Jacob Fleming of Block & Leviton declined to comment beyond court filings.
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