It became known that 18 leading venture capital (VC) investment companies, including Temasek, Sequoia Capital, Sino Global and Softbank, were named defendants in a class action lawsuit filed in the US District Court for the Northern District of California (USA). The fact is that they are accused of having some degree of connection with the bankrupt crypto exchange FTX.
The lawsuit alleged that investment entities were liable for “assisting and abetting” fraud committed by FTX representatives. The document alleges that the defendants used their “power, influence and thick pockets to push FTX into a multibillion-dollar collapse.”
The lawsuit alleges that cryptocurrency exchange FTX violated multiple securities laws and misappropriated funds from its clients. At the same time, the defendant venture capitalists claimed that “everything is clean” in their cooperation with this company. Thus, the prosecution stated that these institutions “directly assisted and conspired to commit a crime and / or helped organize the fraudulent activities of the FTX Group for their own financial and professional gain.”
The prosecution stated that “Defendants also made numerous misleading statements about FTX’s business, finances, operations and outlook. This was done in order to encourage clients to invest, trade and deposit assets into platform accounts.” The lawsuit alleged that the venture capital firms fully vouched for the security and stability of the trading platform and reassured their clients that there were no risks.
Temasek was one of the first investors in FTX with a $275 million investment. The organization is backed by government agencies in Singapore and the current allegations put the authorities in an uncomfortable position due to a potential lack of oversight.