EOS Community Weighs Legal Action Against Block.one Seeking $4.1B

The EOS Network Foundation, the organization set up to support the development of the EOS ecosystem, is considering legal action against estranged parent Block.one, seeking $4.1 billion in damages.

CEO Yves La Rose tweeted Thursday that the foundation is taking steps to hold Block.one "accountable for its past actions and broken promises. Review of ALL possible legal recourse to seek $4.1B in damages underway."

The foundation has enlisted a Canadian law firm to investigate Block.one's actions and pledges to the EOS community and investors to determine whether options are available for legal proceedings, La Rose wrote in a blog post.

Having raised $4.1 billion in its initial coin offering (ICO) in 2018, the blockchain protocol fell short of expectations, with La Rose placing the blame squarely on the shoulders of its major backer. The relationship between the two deteriorated, with La Rose saying in November that EOS – a blockchain-based platform to enable the development of decentralized applications (dapps) – was a "failure" and its native currency a "terrible investment."

The EOS community feels Block.one has shifted its focus and funding – including its vested EOS tokens – to new crypto exchange Bullish, which was unveiled last May with PayPal co-founder Peter Thiel and digital asset manager Galaxy Digital among its backers.

"In November and December 2021 we engaged in negotiations with Block.one to attempt to arrange a fair and reasonable resolution with Block.one that would position the EOS community for future success," La Rose said.

"Unfortunately Block.one decided to walk away from the negotiations and as a result the EOS Block Producers determined it was in the best interest of the community to freeze the vesting of all the EOS tokens that Block.one was to earn in the future."

EOS stakeholders voted in early December to cease Block.one’s EOS token grants, worth $250 million, over a multiyear vesting period.

"At this point, it is the consensus of the majority of token holders that I speak to, inside and outside of EOS, that Block.one knowingly misrepresented their capabilities and this amounts to negligence and fraud," La Rose wrote.

He added that he hoped the EOS Foundation would be to take control of the protocol and guide expansion of the project with the help of fresh investment from venture capital firms.

CoinDesk has reached out Block.one for comment.

Read more: EOS Creator Dan Larimer Is Back

UPDATE (Feb. 10 13:20 UTC): Adds final paragraph regarding approach to Block.one for comment.