The Tezos Foundation has concluded a class-action lawsuit that has been in progress since 2017, settling with plaintiffs for $25 million for its ICO which raised $232 million.

Investors who bought tokens during Tezos’ initial ICO are eligible to file a claim. Investors who sold tokens prior to Nov. 25, 2019, at a loss are eligible for compensation; users who lost access to their passwords are also eligible for compensation. Investors who still hold their original XTZ and those who have not sold XTZ at a loss will not be eligible.

Although $25 million is on offer, investors will need to do quite a bit of work for their payouts. Lawyer and Tezos blogger Alex Liu says that users may need to collect a lot of information, including contribution addresses, emails, and self-calculated losses. Furthermore, those who receive compensation may need to pay taxes on that amount. Investors “might be getting back a small nominal amount,” Liu says.

The outcome also means that investors cannot launch a similar lawsuit around Tezos’ security status in the future.

Central to this case was the matter of whether Tezos’ ICO constituted an unregistered security offering. The settlement did not find that Tezos is a security, and the Tezos Foundation will continue to deny that XTZ is a security. Ultimately, the case only means that investors must be compensated for their losses.

The Tezos Community largely views the lawsuit as unfounded. Liu argues that the lawsuit was “by unscrupulous/unsavory people that needlessly slowed the project and caused irreparable harm.” However, he acknowledges that the case’s judge, Hon. Richard Seeborg called the settlement “fair, reasonable, and adequate.”

The case has little bearing on whether the Securities and Exchange Commission considers XTZ is a security. Statements from 2018 suggest that SEC is keeping documents on Tezos, even though the regulator has not taken any direct action against the organization. Given that the SEC has filed suits against high-profile crypto projects like EOS and Sia, it is plausible that it will take similar action against Tezos.

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