Sequoia Capital, Paradigm, Thoma Bravo Accused of Promoting FTX’s Legitimacy
16.2.2023 | 11:09
• Leading venture capital firms such as Sequoia Capital, Thoma Bravo, and Paradigm were reportedly indicted for adding an „air of legitimacy“ to the bankrupt cryptocurrency exchange FTX.
• Sam Bankman-Fried, accused of committing several crimes such as fraud and money laundering, received a subpoena as part of the case against the organizations he found and will have to present a range of documents on February 17.
• According to a Bloomberg coverage, Sequoia Capital and the other private equity firms were accused in a lawsuit of popularizing FTX in a marketing campaign in 2021.
Accusations Against Venture Capital Firms
Leading venture capital firms such as Sequoia Capital, Thoma Bravo, and Paradigm have been reportedly indicted for adding an „air of legitimacy“ to the bankrupt cryptocurrency exchange FTX. The complaint states that these companies used their professional reputations and media outreach capabilities to portray FTX as a trustworthy and legitimate crypto exchange. As a result, many investors lost multi-billion dollars due to the collapse of this platform in November 2020.
Sam Bankman-Fried – who is accused of committing several crimes such as fraud and money laundering – has received a subpoena as part of the case against the organizations he founded. He will have to present a range of documents on February 17 whereas his father Joseph Bankman and Alameda Research’s former bosses Caroline Ellison and Gary Wang are set to do so one day earlier.
FTX Marketing Campaign Allegedly Used
The lawsuit also claims that Sequoia Capital along with other private equity firms hyped up FTX through an organized marketing campaign during 2021. All these companies had financial stake in this crypto exchange which incentivized them to promote it despite its fraudulent activities which eventually led to its downfall.
Reputational Damage for Crypto Market
The bankruptcy scandal involving FTX has caused massive reputational damage for digital asset sector since it revealed how some big players can manipulate public opinion using their clout in order to gain more profit from investors’ funds. This kind of behavior must be eradicated if people want crypto markets become mainstream investments options in the future.
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