Sequoia Capital, Paradigm among VCs facing ‘tricky’ FTX investor lawsuit
Users of bankrupt crypto exchange FTX reportedly targeted the financiers who promoted the platform, suggesting their efforts gave the now-defunct exchange an “air of legitimacy” in what a crypto lawyer described as “tricky”.
February 15 Bloomberg report disclosed a class action lawsuit filed Feb. 14 by FTX investors against venture capital firm Sequoia Capital and private equity firms Thoma Bravo and Paradigm.
Investors accused the firms of advertising hundreds of millions of dollars of “own investment” in FTX.
The firms were alleged to have engaged in a promotional marketing campaign in 2021 that investors claimed added “an air of legitimacy” to the disgraced crypto exchange.
All three firms were investors in FTX’s $900 million Series B round in July 2021, the largest fundraiser in cryptocurrency history, in which former FTX CEO Sam Bankman-Fried was praised by various firm partners.
IN statement following the July 2021 funding announcement, Paradigm co-founder Matt Huang called Bankman-Fried a “special” founder who is “stunningly ambitious”.
Speaking to Cryptooshala, crypto lawyer Liam Hennessy, a partner at Australian law firm Gadens, said this is a “complex case” and he wonders “what commitment Sequoia and others” have to “completely separate investors.”
He added that even though Sequoia’s due diligence wasn’t high, that doesn’t make it “responsible to others.”
Hennessy believed this could be a case of “buyer beware” as there is no suggestion that the Sequoia was not “playing within the regulatory rules”.
Cryptooshala contacted Sequoia Capital, Thoma Bravo, and Paradigm for comment but received no immediate response.
Charity linked to former FTX executive makes $150M from FTT token insider deal: report
Separate edition of Bloomberg on February 15. report testified that in the same court document, Sam Bankman-Fried and his father, as well as former FTX and Alameda Research executives Caroline Ellison, Nishad Singh, and Gary Wang, received a subpoena — an order to appear in court — to provide additional evidence.
Joseph Bankman, Allison, Wang and Singh were scheduled to appear in court on February 16, and Sam Bankman-Freed on February 17.
Credit : cointelegraph.com