Meraglim Blog

Founders Raise $232 Million for Cryptocurrency, but Can’t Get the Money!

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I love English English much more than American English. The English seem to have just the right turn of phrase for every situation. One of my favorite English English expressions is “too clever by half.” It describes a situation in which smart people, in an effort to show how smart they are, take things too far and end up ruining whatever they set out to fix.

That phrase aptly describes the situation of Arthur and Kathleen Breitman. The Breitmans are talented computer developers and marketers. They invented a new cryptocurrency called the “tezzie,” with distributed ledger and smart contract features that offered an improvement over bitcoin and blockchain in terms of efficiency of verification.

So far, so good. They created an initial coin offering to raise money to fund the development. The ICO raised $232 million last July. Nice! (By the way, the $232 million last July was mostly paid in bitcoin and ether and could easily be worth over $1 billion today.)

Now for the sad part. For unspecified reasons (probably related to taxes, regulation or liability management), the Breitmans and their VC investors put the ICO proceeds in a Swiss trust with an independent Swiss trustee. You can guess what happened next.

The Swiss trustee won’t give them the money! The whole mess is tied up in litigation, according to this article. At this point the Breitmans are suing the trustee to get money to pay for litigation against the trustee! My advice: Next time use the Cayman Islands; people there are much easier to deal with than the Swiss. A Swiss trust was definitely too clever by half.

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