The dust of the FTX blowout is in no way near settling as a class action lawsuit accuses venture capital and private equity firms including Sequoia Capital, Thoma Bravo, and Paradigm of promoting the false legitimacy of the doomed crypto exchange.
According to a Bloomberg report, the lawsuit filed on behalf of FTX investors in the California Northern District Court on Tuesday, February 14th, claims that aforementioned VC and private equity firms irresponsibly bolstered FTX’s reputation to give an “air of legitimacy” to the exchange and to support their investments in FTX entities.
Firms Invested Millions in FTX Empire
According to the lawsuit, Sequoia Capital, Paradigm, and Thoma Bravo participated in promotional marketing campaigns in 2021 in order to raise the company’s valuation and the worth of their own investments.
The complaint notes that defendants were “incentivized to leverage their professional reputations and media outreach capabilities to portray FTX as a trustworthy and legitimate crypto exchange.”
The firms sued made investments worth hundreds of millions in FTX and its entities. They were all participants in the $900 million Series B in July 2021. Sequoia Capital made public its $214 million investment in FTX shortly after the crypto exchange fell into a crisis. The firm also published a 14,000-word profile about SBF titled “Sam Bankman-Fried Has a Savior Complex — And Maybe You Should Too.”
The suit held these firms responsible for the negligent “representation, intentional misrepresentation, fraudulent inducement, civil conspiracy and violations of state consumer protection law.”
SBF Subpoenaed and Banned From Using VPN
In the latest development in the FTX bankruptcy case, New York Judge Lewis Kaplan has banned Sam Bankman-Fried from using VPNs while out on bail, citing several potential concerns. In a February 13th filing, the attorney told the court that SBF accessed the internet via a VPN on January 29th and February 12th.
According to SBF lawyer Mark Cohen, the FTX founder used VPN to watch AFC & NFC Championship games and a Super Bowl game on the second occasion.
Furthermore, SBF and his father Joseph Bankman, along with former FTX and Alameda Research executives Caroline Ellison, Nishad Singh and Gary Wang have received subpoenas, directing them to provide a range of documents regarding the bankruptcy case. February 16th is the date for his father and executives, while the date for SBF is February 17.
