From Sequoia Capital to Temasek, Leading VCs Now Face Lawsuit for Facilitating FTX Fraud

Sequoia Capital, Temasek, Sino International, Softbank, and others are among the many 18 VCs now going through a class-action lawsuit within the US District for the Northern District of California for abetting FTX fraud which prolonged to multi-billion {dollars}.

The 160 paged lawsuit filed on August 7 alleged that these VCs had inspired traders utilizing their “energy, influencer, and deep pockets” to spend money on FTX, “aiding in abetting” the fraud perpetrated by the now-defunct trade.

A complete of 18 VC companies together with Singapore state-backed Temasek, Softbank, and Sequoia Capital have been named in a lawsuit for “aiding and abating” FTX fraud. https://t.co/brTM39dzmv

— Cointelegraph (@Cointelegraph) August 9, 2023

“Multinational VC defendants are a number of the largest enterprise capitalists on the planet and with monumental affect in spurring the event of rising industries, like crypto, and persuading others to spend money on the portfolio corporations they advise and nurture,” highlighted the lawsuit.

The lawsuit has alleged that these multinational enterprise capitalists supplied essential funding to SBF’s fraudulent scheme from these positions of energy. “With out them pumping billions into FTX’s coffers, SBF couldn’t have launched the enterprise nor so extensively expanded its attain by aggressive promotion and advertising and marketing campaigns legitimizing its model in public.”,  the lawsuit mentions.

VCs Made Quite a few Personal Misleading Statements –  Lawsuit 

Citing claims that Temasek made in November 2022 that it has accomplished an intensive audit and regulatory checks on FTX, the swimsuit reads, “The Multinational CV Defendants additionally made quite a few misleading and deceptive statements of their very own about FTX’s operations, enterprise, funds and prospects to induce clients to take a position commerce, and/or deposit property with FTX.”

On November 2022, Singapore’s state-owned funding agency Temasek mentioned that they didn’t discover any pink flags in FTX’s funds regardless of auditing it for eight months, which it did so earlier than investing $275 million within the cryptocurrency trade.

This quote was taken from a weblog put up written on November 17 wherein Temasek wrote, “Much like all investments, we performed an intensive due diligence course of on FTX, which took roughly eight months and from February to October 2021. Throughout this time, we reviewed FTX’s audited monetary statements, which confirmed it to be worthwhile.”

The weblog put up then took an apologetic tone the place Temasek admits that its perception within the judgment, management, and actions of Sam Bankman-Fried was misplaced.

Following the FTX collapse in 2022, Temasek wrote off that funding and slashed compensation for the executives who have been accountable for supervising the FTX funding.

Beneath the part of the lawsuit that highlights the defendant’s function in aiding FTX’s fraud, it has additionally been acknowledged that these multinational VCs didn’t solely present FTX with funding but in addition provided the trade with hands-on help, partnership, steering, infrastructure, networks endorsements, promotions, publicity, cowl, and “different help important to the fraud.”

FTX Regulation Agency Additionally Hit With One other Lawsuit

Reuters have reported that not solely eighteen enterprise capitalists are reeling in opposition to the just lately filed lawsuit. In one other story, Fenwick and West LLP, a authorized agency representing FTX, was sued by FTX clients for allegedly aiding fraud by its “authorized recommendation.”

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