I think the reason why Tezos is tanking is simply a realisation by so-called "investors" that this is not an investment.

I believe the CEO, or the company, has always made it clear that the funds were effectively being "donated" in exchange for tokens which are more like an acknowledgement of thanks for the gift.

Now that a dispute has erupted between the company and the "not for profit" Foundation which received the gift, people who failed to read the ICO papers requesting a donation, have suddenly come to realise that they have given their money away and can't expect to get anything back, ever.

Now we mustn't forget that greed played a big role here. Those who may now complain that they thought they were making an investment, didn't care about the fact it said it was NOT investment. They were greedy and were sure they could "flip" the tokens to another investor who was even more foolish than them.

There are many ICOs which are following exactly the same principal. Everything you give them is a "gift", or a "donation", or a "contribution". Many don't call it an investment, because it is not.

In most cases, the tokens don't entitle you to share in profits or success. You won't get dividends. You can't vote. You can't influence the company in any way. You can't attend Annual General Meetings. You probably have little or no interest in using the tokens. The tokens have nothing more than a symbolic value, like the old war medals that you can now buy for two-a-penny.

In simple terms, the success of the company won't affect the price of the tokens unless the token is very much in demand to spend on the company's products or services. Usually the supply is so large that it dwarfs the "use" case, if there ever was one.

I'm sorry to say, but fools and their money are easily parted. Those who fail to read what they are "buying" (i.e. "donating"), or those who can't understand it, learned a lesson.

Nobody forced them or induced them to "buy". The company did not go knocking on people's door saying, "Please give me your money, and you can probably sell the tokens and get rich". Those who "bought" tokens beat a path to the company's door, demanded tokens, in exchange for the promise of nothing.

These people do not need protecting by the regulator. We don't live in a nanny state. If we stop them investing in ICOs, they will still lose their money by betting on a three legged horse, or a fat greyhound.

The foundation which received the money is a "not for profit" foundation. In other words, it should use the funds it received for the benefit of the "public". that does NOT mean for the benefit of the donors, nor for the benefit of the company.

I can imagine the company thought it would different, maybe they thought all the money going into the foundation would be theirs to do with as they please. Now the foundation is not playing ball, I can see why there is a dispute. A quarter of a billion dollars is an awful lot more than the $20 million they dreamed they might raise.