3 VCs Sues Curve Founder For Fraud And Trade Secret Appropriation

Key Points:

• ParaFi, Framework Ventures, and 1kx — allege that Curve founder Michael Egorov engaged in fraudulent activities and misappropriated trade secrets.
• The lawsuit states that three VC firms invested $1 million in Curve in 2020, after which Egorov deposited the investment in its liquidity pool, and the three companies neither received CRV tokens nor refunded them.
• Egorov’s lawyers say the fabricated story resulted from their ongoing litigation in Switzerland filed in 2020.

According to DL News, three venture capital firms, ParaFi Capital, Framework Ventures, and 1kx have filed a lawsuit against Curve founder Michael Egorov, accusing him of engaging in fraudulent activities and appropriating trade secrets, causing serious economic losses.

The plaintiffs allege that three companies invested $1 million in Curve in 2020, after which Egorov deposited the investment in Curve’s liquidity pool, and that the three companies neither received CRV tokens nor refunded.

According to the lawsuit, defendant Egorov needed the legitimacy provided by a California DeFi venture fund when launching and raising money for the Curve project. At that time, the defendant made false statements about how his assets were deployed at Swiss Stake GmbH, a Curve license holder, and promised to use the investment money to hire developers, attorneys, and other staff.

But defendant Egorov had no intention of relinquishing control of Curve, locking up more CRVs than expected, and not delegating rights to the Curve DAO, but sold enough CRV tokens to generate a profit while maintaining share control, depositing plaintiff funds into its liquidity pool for a profit, and selling millions of dollars worth of CRV tokens (the plaintiffs argued that these tokens belonged to them).

The plaintiffs allege that they did not receive the promised Swiss Stake, that their nearly $1 million funds were never returned, and that they never received the tens of millions of dollars worth of CRVs they were claimed to be entitled. The plaintiffs also allege that while Egorov defrauded them, they lost business opportunities with Curve’s competitors.

“Plaintiffs, each of whom were users of the Curve platform, decided to invest in Swiss Stake because they saw a unique and potentially profitable opportunity to help develop a highly successful automated market-maker,”

The lawsuit filed by the VCs said.

Defendant Egorov’s defense team argued that the charges brought by the three companies in the San Francisco court resulted from their ongoing lawsuit filed in Switzerland in 2020.

“To justify their blatant forum shopping, Plaintiffs concocted a new and compelling story painting Egorov as an evil villain who duped three naïve VC firms into giving up ‘trade secrets’ (such as the names of widely known investors) and $1 million in investments funds (that Swiss Stake promptly offered to return),”

Egorov’s lawyers say in the litigation, filed last month.

Egorov said he would comment after discussing it with the lawyers.

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