A class-action law-suit filed on behalf of investors in Sam Bankman-Fried’s failed cryptocurrency exchange FTX, has accused a number of venture capital and private equity firms, including Sequoia Capital, Thoma Bravo and Paradigm, of hyping the “legitimacy” of the business, according to a report by Bloomberg.
A class-action law-suit filed on behalf of investors in Sam Bankman-Fried’s failed cryptocurrency exchange FTX, has accused a number of venture capital and private equity firms, including Sequoia Capital, Thoma Bravo and Paradigm, of hyping the “legitimacy” of the business, according to a report by Bloomberg.
According to the complaint which was filed on Tuesday, the firms all participated in a marketing campaign in 2021 which added an “air of legitimacy” to the business, which subsequently collapsed causing billions of dollars in losses, said the Bloomberg report.
Thoma Bravo reportedly invested more than $100 million, Paradigm invested more than $250 million in FTX, while Sequoia wrote down the full value of its $214 million investment in FTX shortly after the crypto exchange fell into crisis.
The complaint was reported as saying that: “As a result of defendants’ significant investments in the FTX entities, each was incentivized to leverage their professional reputations and media outreach capabilities to portray FTX as a trustworthy and legitimate crypto exchange.” The complaint was also reported to allege violations of various state and federal laws, including misrepresentation, false advertising and civil conspiracy.
Paradigm, Sequoia and Thoma Bravo have yet to comment on the allegations, according to Bloomberg.
