Davis Polk Secures Dismissal for Lack of Personal Jurisdiction on Behalf of Tezos Stiftung in Putative Securities Class Action Relating to Alleged Initial Coin Offering
8/29/2019

Davis Polk secured a victory on behalf of its client Tezos Stiftung (or the Tezos Foundation) in a putative securities class action filed in California state court. The Tezos Foundation is a foundation organized under the laws of Switzerland that promotes the adoption and use of a blockchain technology called Tezos that facilitates verification of transactions through a cryptocurrency known as “XTZ.” In July 2017, the Foundation raised approximately $232 million to support the development of the Tezos platform. Multiple class action complaints were subsequently filed alleging that the fundraiser was an unregistered securities offering in violation of U.S. securities laws and seeking the return of the contributions.

In July 2019, Davis Polk filed a motion challenging the jurisdiction of the California state courts over the Tezos Foundation. Davis Polk argued that the plaintiff had failed to meet his burden in establishing that the court had personal jurisdiction over the Switzerland-based entity. The plaintiff argued that the Foundation had relied on the work of California residents to launch the fundraiser, and had solicited contributions from California residents, including the named plaintiff. The court accepted Davis Polk’s arguments that the plaintiff had not shown that the Tezos Foundation was present in California, or that any California conduct that occurred in the fundraiser could be attributed to it. The court also denied the plaintiff’s request to take jurisdictional discovery of the Foundation.

This is the second time that Davis Polk has succeeded in obtaining dismissal of a case filed against the Tezos Foundation in the California state courts.

The Davis Polk team includes partners Neal A. Potischman and Edmund Polubinski III and associates Andrew S. Gehring (who argued the motion), Serge A. Voronov, Hannah B. Gerstenblatt, Garrett Cardillo, Kelley B. Harrington and Abigail Q. Cooper. Members of the Davis Polk team are based in the Northern California and New York offices.