VCs Facing Tricky FTX Investor Lawsuit: Sequoia, Paradigm Among Them
• Investors of bankrupt crypto exchange FTX have filed a class-action lawsuit against venture capital firms Sequoia Capital, Thoma Bravo, and Paradigm.
• The investors allege that the financiers promoted their investments in the platform, giving it an “air of legitimacy”.
• Crypto lawyer Liam Hennessy believes it could be a case of “buyer beware” as there is no suggestion that Sequoia wasn’t playing within the regulatory rules.
Investors File Class-Action Suit Against Financiers
Users of bankrupt crypto exchange FTX have reportedly taken aim at financiers who promoted the platform, suggesting their efforts added an “air of legitimacy” to the now-defunct exchange in a case labeled as “tricky” by a crypto lawyer. A Feb. 15 Bloomberg report revealed a class-action suit filed Feb. 14 by FTX investors against venture capital firm Sequoia Capital and private equity firms Thoma Bravo and Paradigm.
Investors Accuse Firms Of Promoting Investments
The investors accused the firms of touting “their own investments” of hundreds of millions of dollars in FTX. It was alleged the firms were involved in a promotional marketing campaign in 2021, which the investors alleged added an “air of legitimacy” to the disgraced crypto exchange.
Firms Participated In Largest Crypto Raise In History
The three firms were all investors in FTX’s $900 million Series B round in July 2021, the largest raise in crypto history, in which various partners of the firms spoke highly