Are the Breitmans letting go of Tezos?

Tezos fans have taken to Reddit to demand answers from founders Arthur and Kathleen Breitman about recent comments the duo made that some have interpreted as the pair giving up the project. 

Dubbed an unnecessary “high-school drama” by many in the community, it’s the latest in a string of controversies to hit the 11th biggest blockchain platform by market cap.

For years, a court case fuelled by the Breitmans feud with the former chairman of the Tezos Foundation hung like a malevolent cloud over the project. And the community suspects that a fresh disagreement between the pair and the Foundation has now sprung up. 

A new feud between the foundation and the Breitmans?

There are various reasons many in the community have jumped to this conclusion. 

Tezos was launched in 2018 as the world’s first “self-amending” cryptocurrency—one that could continuously update itself and assimilate the best new ideas. A blockchain without any need for those that created it.

The plan was for the project’s architect, Arthur Breitman, to distance himself from Tezos, which he reportedly began to do not long after the launch. But the removal—without explanation—of his name from the Tezos’ Technical Steering Committee, appears to have started the disquiet within the community.

Shortly after the announcement, Breitman cited “veiled threats,” but gave no indication as to who they were from. Unsurprisingly, this did nothing to alleviate concerns, and raised even more worries.  

A surprise announcement by his wife and partner Kathleen quickly followed, explaining that she may not launch her new project on the platform. This led to further speculation that all was not well—once again—between the Breitmans and the Tezos Foundation.

“No one in the community wants to lose Arthur or Kathleen, but everyone is being blindsided by, from my best guess, a feud between the foundation and the Breitmans,” Redditor onebaldude, a Tezos validator and a participant in the platforms’ initial coin offering (ICO), told Decrypt.

Others, in various threads on the social media platform, accused the Foundation of incompetence and a lack of transparency in respect of investments made.

The community’s anger is understandable. This confusion is the latest issue the project has had to endure over the past few years. 

We reached out to both Arthur and Kathleen to comment on the rumors, but so far neither have responded to questions. 

Litigation has dogged the Tezos platform 

Only last month it seemed Tezos had sailed into calmer waters. On March 20, the Tezos Foundation announced that it had entered into a settlement in a consolidated class-action lawsuit worth $25 million.

The long-running legal fight concerns the record-breaking, $232 million Tezos initial coin offering, held in summer 2017. The lawsuit alleged it was an unregistered securities sale.

In October 2017, Reuters suggested that a battle over the control of the ICO funds pitted the Breitmans against Johann Gevers, who was then president of the supposedly neutral Tezos Foundation, which was set up to handle the ICO. 

The feud and subsequent lawsuit delayed the Tezos launch and led to compensation claims by investors. The sale was not registered with the US Securities and Exchange Commission, and a settlement was needed to prevent Tezos from falling afoul of it, a fate suffered by crypto companies Kik and Telegram. 

But it’s now apparent that Tezos’ problems run deeper than ancient litigation.

Community members, including “onebaldude” have called on Arthur Breitman to air any issues publicly or to explain why he is reluctant to do so. 

But Breitman’s comments, to date, have only served to fuel speculation. Aside from the reference to veiled threats, Breitman’s only contribution to the Reddit discussion was to contradict a statement about his public appearances, and to say that he was “No longer giving talks.” The most recent of which, focuses around Kathleen Breitman’s upcoming game, Emergents. 

Emergents may not emerge on Tezos

Community members have accused Kathleen Breitman of misleading them into believing that she would launch her new blockchain-based game, Emergents, on Tezos. 

Developed by her own company, Coase, Emergents has been described as a blockchain-based competitor to card games like Magic: The Gathering and Hearthstone. It was first announced in March and in-game payments were reported to be made in XTZ, Tezos’ native token. The whitepaper mentions XTZ no less than 25 times, and Kathleen gave no indication in a December podcast interview that any other platform was being considered. 

But on Monday Breitman announced that she would be considering other platforms for the trading card game, and had an obligation to her investors to do so.  

“Candidly, I have a lot of concerns about the platform,” she wrote. Pressed on these, she cited two problems: “No decent Wallet” and “No stable coin.”

In the absence of clarity regarding the Breitmans intentions towards Tezos, community members have called on the Foundation to fill the void. But when Decrypt reached out, their reply was less than illuminating. 

“We appreciate Arthur and Kathleen’s contributions and will always do so, but they are, of course, free to decide their own level of involvement with TF,” Tezos Foundation council member Hubertus Thonhauser told us.

But Redditors have a string of questions to put to the Foundation. They accuse it of pivoting Tezos into an STO platform and say that infrastructure—such as a broken wallet—partnerships, and innovations aren’t being given sufficient consideration.

In response, Thornhauser said “Transparency is incredibly important to the TF,” and explained the Foundation sends weekly updates and publishes a biannual report. 

“We are committed to providing the community insight into the TF’s activities and investments and there is more to come,” he added. But despite the infighting that has plagued the project, research suggests Tezos is fairing surprisingly well. 

Savvy Portfolio Management saves Tezos

When Wilson Withiam of crypto data analytics firm Messari delved into the second biannual update, he found data to suggest that the Tezos Foundation’s portfolio is looking healthy. 

Notably, according to the report, the share of the Tezos Foundation's portfolio made up of Bitcoin fell from 61 percent in July to 47 percent as of the end of January. The Foundation holds a large amount of capital ($635 million).

Investments into a stability fund, a diversified range of exchange-traded funds (ETFs) and bonds as well as fiat currencies, acted as risk management instruments that ensured "operational effectiveness" against crypto volatility, Tezos Foundation CFO Roman Schnider, told CoinDesk in March. 

The Messari researchers speculated that the foundation chose to offset its increased exposure to XTZ, which has seen a 55% decrease in value since hitting an all-time high at the end of February, with more traditional investments. 

Over on Reddit meanwhile, the clamor for clarity regarding the Tezos co-founders continues. But notable among the criticism is a recognition of the strength of the network created by Arthur and Kathleen Breitman—one that can function very well without them, as the decentralized blockchain it was designed to be.