Tezos Founder Sanctioned by Regulator for Allegations of Past Misconduct

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Tezos co-founder Arthur Breitman has been sanctioned by a top Wall Street regulator in connection with allegations that he violated regulations for securities professionals while working at Morgan Stanley.

According to Reuters, the Financial Industry Regulatory Authority (FINRA) — a self-regulatory organization — on April 18 fined Breitman $20,000 and has prohibited him from associating with broker-dealers for two years.

FINRA claims that Breitman concealed his early work on the Tezos project, which began while he was still employed at Morgan Stanley, from his employer. This would have violated FINRA rules, which require securities professionals to give their employers written notice that they are engaging in outside business activities.

“Breitman did not notify Morgan Stanley at any time that he was engaging in these outside business activities,” FINRA said in the settlement agreement.

Breitman neither admitted nor denied the allegations in the settlement agreement.

In previous public interviews, the Breitmans acknowledged that they had begun working on Tezos prior to Arthur’s departure from Morgan Stanley but said that they had made all the “proper disclosures” and that the project was initially a hobby, not a commercial venture.

However, Arthur Breitman published early whitepapers about Tezos under a pseudonym, L.M. Goodman, and the founders had drafted a business plan prior to Arthur Breitman’s departure from Morgan Stanley in 2016.

“Breitman’s use of the L.M. Goodman pseudonym to promote Tezos … effectively concealed Breitman’s involvement with Tezos from” the company, the settlement agreement said, adding that the “Business Plan failed to provide a balanced presentation and sound basis for evaluating an investment in Tezos.”

The FINRA settlement is not expected to impact the development and launch of the Tezos network, which is rapidly approaching following multiple delays related to infighting between developers and the former president of the Tezos Foundation.

At present, the network’s beta implementation is slated to launch before the end of Q2 2018, followed by the mainnet in Q3.

“The settlement with FINRA is unrelated to and has no impact on the launch of the Tezos network,” Sarah Lightdale, an attorney for Breitman, told Reuters in a statement. “Arthur cooperated fully with FINRA at all times and Arthur is pleased to put this personal matter behind him.”

Featured image from Shutterstock.

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April 20, 2018 at 10:15AM

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