Leading venture capital (VC) investment firms are facing legal action because of their associations with the liquidated FTX, a Bahamas-based cryptocurrency exchange. The case, filed on 7 August 2023, claims these companies ‘aided and abetted’ FTX to commit the fraud, ultimately leading to the platform’s demise.
Class action lawsuit filed against prominent VCs
This lawsuit details how the defendants, which include industry knowns such as Temasek, Sequoia Capital, and Sino Global, used their influence and financial standing to help launch FTX and enable the multibillion-dollar disaster that affected countless people. It also alleges that these VCs painted a false picture of FTX, based on supposed diligent vetting.
Temasek alone contributed $275m to the crypto exchange and was one of FTX’s first investors. However, when the FTX titanic hit its iceberg in November 2022, Temasek abandoned ship and wrote off the investment in its entirety.
Don’t miss out the latest news, subscribe to LeapRate’s newsletter
FTX allegedly broke numerous securities laws and stole billions of dollars in client deposits to operate the company and fund investments, which included vast sums in illegal campaign donations to both the Democrats and Republicans in the U.S. The latter was reportedly done with the aim to influence how Washington rules on cryptocurrency regulations.
Other names under the microscope in this class action are Thoma Bravo, Paradigm, SkyBridge, and Multicoin Capital. FTX founder, Sam Bankman-Fried, faces up to 155 years behind bars if found guilty of the deluge of charges against him. Bankman-Fried once dubbed himself the “saviour of the cryptocurrency industry.”
