- Investors of collapsed crypto exchange FTX drag promoters to court.
- The crypto lawyer states Sequoia’s only wrongdoing in the case.
- Former FTX CEO, SBF subpoenaed.
FTX is again in the news; this time, the collapsed exchange’s users are behind it as they took to dragging financiers that promoted the former crypto exchange to court.
The users of the now-bankrupt crypto firm aimed at the financiers of FTX like Sequoia Capital and Paradigm with claims that their contributions to FTX were a part of what pushed users into believing the exchange was a legitimate one.
In a report revealed by Bloomberg, a class action suit has been filed against Sequoia Capital, a private equity firm, Thomas Bravo, and Paradigm by FTX investors exposed to the exchange’s collapse.
The accusations from FTX investors were that the firms were responsible for touting their investments worth hundreds of millions of dollars in FTX. The firms were allegedly responsible for promoting the bankruptcy exchange in a light that shined positively on it.
In addition to that, the three firms in the class-action suit were also investors in FTX’s $900 million Series B round that happened around July 2021, which is recorded as the most significant crypto raise in history, which had various partners of the firms as mentioned above speaking highly and positively of the former CEO of FTX, who is now under investigation for using customers funds to aid his expensive lifestyle.
It was also reported that around that period, July 2021, a co-founder for Paradigm, Matt Huang, had praised Sam Bankman-Fried for being a particular founder with stunning ambition, which could also point in the light of favoritism that the firms had towards FTX, which the investors are now using as a source to take them to court.
In a conversation with Cointelegraph, a crypto lawyer and a partner at Law Firms Gadens, they called the suit tricky. They pointed out the question on Sequoia’s and other firms’ obligations towards the investors.
The most critical fault that could be found in Sequoia’s promotion of FTX could be a lack of including the buyers beware tag to protect investors from any possible cases of scams and destruction. Still, regardless, there is no concrete proof of Sequoia not following regulatory procedures while promoting.
Conclusion
Sam Bankman-Fried, his father, and the former executives of Alameda Research, Caroline Ellison, Gary Wang, and Nishad Singh, were all subpoenaed to provide more evidence for the suit. While they all received an order to appear in court, they received separate dates for their appearance.
Since the collapse of FTX around November last year and as the investigation on SBF continues to unfold, more lawsuits are being filed. More stories are growing on the happenings that are surrounding the now bankrupt exchange, especially in regards to the companies and investors that were exposed to the collapse of FTX, some of which are the ones that chose to file a suit against Sequoia and Paradigm.
