Davis Polk Secures Denial of TRO on behalf of Tezos Stiftung in Securities Class Action
On December 20, 2017, Davis Polk obtained the denial of an application for a temporary restraining order that sought to freeze the assets of its client Tezos Stiftung (or the Tezos Foundation). The Tezos Foundation is a foundation organized under the laws of Switzerland currently developing a self-amending cryptographic ledger for the transaction of cryptocurrency. In July, it raised approximately $232 million worth of Bitcoin and Ether in a fundraiser for the development of the Tezos platform. The value of the cryptocurrency collected in the fundraiser has since increased. Multiple class action complaints were subsequently filed against the Foundation and other defendants alleging that the fundraiser was an unregistered securities offering in violation of U.S. and California securities laws and seeking the return of the donated cryptocurrency.
The plaintiff in one action filed in the Northern District of California filed a motion for a temporary restraining order, seeking to freeze all of the Foundation’s assets. Following expedited briefing, on December 20 the Court denied the application. Without reaching the merits of the dispute (and without needing to address Davis Polk’s objection to the Court’s jurisdiction over the Foundation), the Court accepted Davis Polk’s arguments that the plaintiff had not established a risk of irreparable harm. The Court concluded that the plaintiff failed to show that money damages would be inadequate to compensate his alleged losses, or to show that the Foundation assets were being dissipated improperly.
The Davis Polk team includes partners Neal A. Potischman (who argued the motion) and Edmund Polubinski III, associates Andrew S. Gehring, Serge Voronov, Garrett Cardillo and Abigail Q. Cooper, and legal assistant Felicia Yu. Members of the Davis Polk team are based in the Northern California and New York offices.