The Bitcoin News

The fine issued by the Financial Industry Regulatory Authority (FINRA) to Tezos co-founder Arthur Breitman could reportedly affect the Tezos project, especially if the SEC deems its tokens to be a security. On April 18, 2018, Breitman was fined $20,000 for alleged violations of FINRA regulations, a charge he neither admitted nor denied. FINRA also suspended him from associating with any broker-dealers for the next two years. This news is the latest in a laundry list of controversies that have surrounded the Tezos project since its successful ICO in 2017.

Failure to Disclose

Arthur Breitman reportedly ran afoul of FINRA regulations while he was still working at Morgan Stanley between 2014 and 2015. FINRA regulations stipulate that all registered securities professionals must provide written notice to the employers if they are engaged in other business activities for which there exists a “reasonable expectation of compensation.”

According to FINRA, the French national failed to disclose that he was involved in the Tezos project despite the fact that he was developing and pitching the idea.

Apart from failing to disclose, Breitman also allegedly provided false information on separate compliance questionnaires during his time at Morgan Stanley. This is according to the settlement agreement reached between Breitman and FINRA. The regulatory agency cited some correspondences between Breitman and others in early 2015 as justification for their application of the ruling. A business plan from early 2015 listed Arthur Breitman as CEO of the project.

FINRA also ruled that the Tezos co-founder had tried to conceal his association with the Tezos project by using a pseudonym L.M.Goodman in many documents. An email sent to an acquaintance in 2015 revealed that he was trying to conceal his participation in the Tezos project. According to FINRA, this showed a clear motive on the part of Breitman to not reveal his business activities to his employers.

Potential Problems

Reacting to the fine, Sarah Lightdale, an attorney for the Tezos co-founder said that the FINRA settlement has nothing to do with the Tezos project and does not affect its launch in any way. According to her, Breitman cooperated with FINRA and wishes to move forward, putting the issue behind the project.

While the fine is relatively small, it is the suspension by FINRA that could prove to be potentially problematic. The SEC Act of 1934 effectively prohibits him from being associated with any of the company that is engaged in buying or selling securities. This could become a problem if the SEC deems that Tezos tokens are indeed securities. By virtue of his suspension, Arthur Breitman will not be allowed to associate himself with the project. In January 2018, SEC Chairman, Jay Clayton said that all ICO tokens were securities.

There is currently a lot of lobbying going on by Silicon Valley VCs to get the SEC to soft-pedal on its ICO regulations. However, if the SEC does rule that all ICO tokens are securities, then Arthur Breitman may no longer be able to associate himself with the Tezos project that he co-founded with his wife, Kathleen.

The Tezos ICO raised $232 million during its July 2017 ICO.

The post Tezos Co-Founder FINRA Suspension Could Impact Project Launch appeared first on BTCMANAGER.

Btcmanager.com is author of this content, TheBitcoinNews.com is is not responsible for the content of external sites.