Home Blockchain Temasek, Sequoia Capital, Softbank, main VCs face lawsuit for “abetting” FTX fraud

Temasek, Sequoia Capital, Softbank, main VCs face lawsuit for “abetting” FTX fraud

Temasek, Sequoia Capital, Softbank, main VCs face lawsuit for “abetting” FTX fraud

Eighteen main enterprise capital (VC) funding corporations, together with Temasek, Sequoia Capital, Sino World and Softbank, have been named as defendants in a class-action lawsuit filed in the US District Court docket for the Northern District of California for his or her hyperlinks to the now-bankrupt crypto trade FTX.

The lawsuit, filed on Aug.7, alleged that the funding corporations have been accountable for “aiding and abetting” the FTX fraud. The go well with claims that the defendants used their “energy, affect and deep pockets to launch FTX’s home of playing cards to its multibillion-dollar scale.”

A snippet of Cabo vs. Temasek Holdings lawsuit. Supply: CourtListener

The lawsuit states that the FTX cryptocurrency trade violated a number of securities legal guidelines and stole prospects’ funds whereas the defendant VCs provided an elusive image of the trade, claiming that they had accomplished their due diligence. Thus, these VC corporations straight “perpetrated, conspired to perpetrate, and/or aided and abetted the FTX Group’s multi-billion-dollar frauds for their very own monetary {and professional} acquire,” the lawsuit claims.

Whereas discussing the function of VC corporations in aiding and abating FTX fraud, the plaintiffs cited the instance of Temasek and its assertion concerning the monetary situations of FTX. Temasek claims it carried out an eight-month-long in depth assessment of FTX’s funds, audits and regulatory checks, saying it discovered no crimson flags. The go well with reads:

“The Multinational VC Defendants additionally made quite a few misleading and deceptive statements of their very own about FTX’s enterprise, funds, operations, and prospects for the aim of inducing prospects to speculate, commerce, and/or deposit belongings with FTX.“

The go well with additional alleged that these VC corporations vouched for the protection and stability of FTX and marketed the trade’s purported makes an attempt to grow to be correctly regulated.

Temasek was one of many early buyers in FTX with a $275 million funding. Nevertheless, after the collapse of the crypto trade in November 2022, the funding agency wrote off its total funding and even slashed compensation for the executives accountable for the FTX funding.

Associated: Prosecutors will nonetheless take into account Sam Bankman-Fried’s alleged marketing campaign finance scheme at trial

Temasek, a Singapore state-backed funding agency, additionally places the Singaporean authorities within the scorching seat over its failure of oversight.

The FTX collapse created a crypto contagion and forged a shadow of doubt on your entire crypto ecosystem resulting in a drought in institutional crypto funding for months.

Journal: Deposit danger: What do crypto exchanges actually do together with your cash?