Whenever a key person is suspended, it is quite natural to expect the consequences of it. Similar is the case in respect of Financial Industry Regulatory Authority’s (FINRA) suspension of a co-founder of Tezos, Arthur Breitman. None-the-less, the move came amidst indications that the project is still undergoing close scrutiny under different legal issues. Aside from that, there is every possibility that he might have to distance himself from the project eventually.
Breitman has hidden from the publication of a white paper on the digital currency project in September 2014 and listed L.M. Goodman as the author. However, he came out and disclosed that he was the original author of the work thus driving many to wonder why he resorted to a pseudonym. He was also involved in a project at the same time to raise $232 million through an initial coin offering (ICO) last year as he was working in Morgan Stanley’s investment bank division. This is exactly dragged him to the controversy and had to face the consequences of providing a false name.
Aside from that, he was registered as a broker-dealer with FINRA, which is a self-regulatory body for dealers and brokers in the United States. According to the requirements of the regulator, registered securities professionals should keep their employers informed about any business that has the potential for profit when engaged on the sidelines. However, he failed to keep his employer about his Tezos project, and the using of a pseudonym only suggested that he was trying to conceal his involvement. He also left Morgan Stanley and was no longer registered with the agency.
According to bitcoin magazine, FINRA has not only fined Breitman $20,000 but also suspended him for two years from associating with broker-dealers for making false statements on Tezos project when he was working with Morgan Stanley. This raises a question whether the regulator has let him with a small amount of fine. That is primarily because several fines have ranged in the hundreds of thousands of dollars in the past.
However, the two-year ban appears to be a big one as it hit an upper limit. The history suggested that only a few peoples had to face similar kind of suspension for such a long period from the securities industry. The issue surfaced after Reuters published a complete report on the Tezos project in October last year and that brought FINRA and Securities and Exchange Commission (sec) into the picture.
The ban on Breitman meant that he would not be able to associate himself with anyone dealing with buying or selling securities in the next two year period unless there is a special waiver. Even in such a situation, he could not associate with the securities-related company. Therefore, if Tezos tokens are treated as a security, then the project or the ICO could face issues.
Meanwhile, Law Professor at Law School, Robert Hockett, believes that there is a threat that Breitman cannot be allowed to have any affiliation with the Tezos project if the SEC terms it as securities business. However, Breitman attorney thinks that the settlement would not have any impact on the Tezos network launch.