In what appears to be a first-of-its-kind settlement, the Tezos Foundation has agreed to pay $25 million to settle claims brought on behalf of investors who claimed that the blockbuster initial coin offering on the Tezos blockchain violated U.S. securities laws.

Lead plaintiffs counsel at HGT Law and Block & Leviton filed court papers Friday detailing the proposed deal brought by investors who claimed they lost money in the the July 2017 ICO, which raised the equivalent of $232 million in Bitcoin and Ethereum from those seeking to buy so-called XTZ tokens before the project was bogged down in delays and infighting at the Swiss foundation formed to promote it.

The proposed deal, reached after a November 2019 mediation in New York before retired federal judge Layn Phillips, still requires the sign off of U.S. District Judge Richard Seeborg of the Northern District of California. Seeborg in 2018 let the lawsuit survive motions to dismiss brought on behalf of defendants, including Arthur and Kathleen Breitman, the husband-and-wife team behind Tezos, their California-based company Dynamic Ledger Solutions, which developed the underlying blockchain technology, and Tezos Stiftung, the Swiss foundation set up to oversee the ICO.

The settlement, which came after a prior unsuccessful round of mediation, leaves unanswered the underlying legal questions of whether the ICO qualified as a securities offering requiring the Tezos backers to file a registration statement with the U.S. Securities and Exchange Commission, and whether the Breitmans were "controlling persons" under the Securities Act of 1933. Plaintiffs counsel indicated that damage estimates discussed at the mediation ranged from anywhere between $1 million and and $150 million.

"Lead Counsel is unaware of previous securities settlements that are substantially similar to the Settlement here," the plaintiffs lawyers wrote. "Federal Plaintiffs believe that the proposed $25,000,000 Settlement is an excellent result for the Settlement Class in light of all of the risks of continued litigation, and falls well within a range of what is considered fair, reasonable, and adequate."

The claims administrator hired by the plaintiffs to identify class members and calculate their alleged losses in the ICO estimates 7,579 of the 30,317 potential settlement class members will submit claim forms. With plaintiffs counsel indicating that they will request up to $8,333,333, or one-third of the settlement funds, the deal would work out to about $547 per class member, or $2,177 for each class member filing a claim should the administrator's estimate hold true. Individual payouts, however, would vary based on the amount of investment made at the time of the ICO and the difference in the price of XTZ between purchase and sale.

HGT Law's Hung Ta and Block & Leviton's Jeffrey Block didn't immediately respond to a request for comment.

Patrick Gibbs at Cooley and Brian Klein at Baker Marquart, who represent the Breitmans and Dynamic Ledger Solutions, didn't respond to messages. Davis Polk & Wardwell's Neal Potischman, who represented the foundation, declined to comment.

Correction: An earlier version had the wrong first name for Jeffrey Block.