SAN FRANCISCO—Plaintiffs lawyers involved in the pioneering Tezos litigation, which could test how securities laws apply to initial coin offerings (ICOs), are in a simmering dispute over whether to split the case in two.
A federal judge in San Francisco last month named California law firm LTL Attorneys and Hung G. Ta, Esq. in New York to lead a set of federal class actions against Tezos and other defendants. The cases allege that the $232 million ICO Tezos conducted last year was an illegal offering of securities and seek to get back cryptocurrency invested in tezzies—the Tezos digital tokens which have yet to launch.
But citing a recent decision by the U.S. Supreme Court in a case called Cyan v. Beaver County Employees Retirement Fund, the attorney who filed the first case against Tezos—San Diego securities lawyer James Taylor-Copeland—is seeking to have it remanded to state court in San Francisco, where it would presumably move forward on a parallel track.
In Cyan, the high court held last month that state courts maintain jurisdiction over class actions brought under the federal Securities Act of 1933. The case turned on the interpretation of the 1998 Securities Litigation Uniform Standards Act.
Taylor-Copeland argues the Supreme Court’s ruling requires that his case on behalf of investor Andrew Baker be remanded to state court. It was removed to the U.S. District Court for the Northern District of California last fall by attorneys for Dynamic Ledger Systems (DLS), the company behind the Tezos blockchain project.
DLS’s attorneys at Baker Marquart and Cooley now agree that, under Cyan, the case should be sent back to state court.
The attorneys named to spearhead the federal class actions, however, argue that Taylor-Copeland is being given a second chance to take control of litigation against Tezos after initially bowing out of the running to lead in federal court.
“The mischief is all the greater here because it appears that Baker’s counsel, Taylor-Copeland Law, has teamed up with the law firms of Robbins Geller Rudman & Dowd LLP and Silver Miller (collectively ‘Robbins Geller’) so that these firms could hedge their litigation positions,” Enoch Liang of LTL Attorneys and Hung Ta wrote in a brief.
“Counsel should not be permitted to split the baby or get a second bite at the apple,” they added. “At a minimum, Baker should disclose to the Court in his reply whether he has any agreements with Robbins Geller that could affect his adequacy to represent the interests of the Class.”
There are a web of law firms involved in the case. Robbins Geller had previously vied to lead the class actions in federal court but lost out. Among the firm’s three named plaintiffs is one investor who originally filed suit in federal court in Florida. He was represented at filing by David Silver at the Silver Miller firm.
Robbins Geller attorney Danielle Myers, who is handling the Tezos case for the firm, did not immediately respond to an email requesting comment. Silver responded but deferred an inquiry to Robbins Geller.
In a reply brief filed Tuesday, Taylor-Copeland called the accusations “incorrect, irrelevant, and unprofessional.”
“They do not warrant a response, except to note that Baker’s counsel, who focuses on representing aggrieved cryptocurrency investors, will vigorously represent the interests of Baker and the putative class upon return to state court,” he added.
Taylor-Copeland did not immediately respond to an email seeking further comment.