BTC

$94491.034

-1.09%

ETH

$3341.89

0.60%

XRP

$2.172

0.70%

BNB

$692.742

0.67%

News

Prominent VC Firms, In Cluding Temasek, Ensnared In Lawsuit Alleging Complicity In FTX Scandal

August 9, 2023 - Around 2 mins mins to read

Key Points:

  • Top venture capital firms, including Temasek and Sequoia, sued for alleged involvement in the FTX crypto exchange scandal.
  • The lawsuit claims VCs aided FTX’s fraudulent rise, presenting a distorted image of the exchange’s due diligence.
  • Fenwick & West LLP also sued, and ex-FTX co-CEO cooperates with prosecutors, sparking industry interest.
A class-action lawsuit has been filed in the United States District Court for the Northern District of California against 18 prominent venture capital (VC) investment firms, which include names like Temasek, Sequoia Capital, Sino Global, and Softbank, according to a Cointelegraph report.
Prominent VC Firms, In Cluding Temasek, Ensnared In Lawsuit Alleging Complicity In FTX Scandal

The lawsuit, initiated on August 7, targets the VC firms for their alleged involvement in the now-bankrupt cryptocurrency exchange FTX.

The plaintiffs claim that these VC firms played a role in aiding and abetting the FTX fraud, utilizing their influence and financial resources to contribute to the exponential growth of what they term a fraudulent enterprise.

The suit asserts that FTX’s actions violated various securities laws and resulted in the misappropriation of customers’ funds, while the defendant VCs presented a distorted image of the exchange, asserting that they had conducted thorough due diligence.

One example cited in the lawsuit involves Temasek’s assertion that they conducted an extensive review of FTX’s finances, audits, and regulatory checks, detecting no signs of concern. This claim is now being scrutinized in the context of the ongoing legal proceedings.

Interestingly, Fenwick & West LLP, the law firm that formerly served as FTX’s primary legal counsel, is also facing a class-action lawsuit. Plaintiffs contend that the firm was implicitly complicit in deceiving clients, and insiders of the exchange are implicated in this alleged misconduct.

Ryan Salame, former co-CEO of FTX Digital Markets, is reportedly cooperating with prosecutors in connection to FTX’s collapse, with the possibility of testifying against founder Sam Bankman-Fried in an upcoming trial.

Furthermore, Sino Global Capital’s Liquid Value fund, managed by Matthew Graham, has submitted a substantial $67.3 million claim against the exchange.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Fenwick & West LLP

FTX

Ryan Salame

Sequoia Capital

Sino Global

SoftBank

temasek

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.