Users of bankrupt crypto exchange FTX have reportedly taken aim at financiers who promoted the platform, suggesting their efforts added an “air of legitimacy” to the now-defunct exchange in a case labeled as “tricky” by a crypto lawyer.
A Feb. 15 Bloomberg report revealed a class-action suit filed Feb. 14 by FTX investors against venture capital firm Sequoia Capital and private equity firms Thoma Bravo and Paradigm.
The investors accused the firms of touting “their own investments” of hundreds of millions of dollars in FTX.
It was alleged the firms were involved in a promotional marketing campaign in 2021, which the investors alleged added an “air of legitimacy” to the disgraced crypto exchange.
The three firms were all investors in FTX’s $900 million Series B round in July 2021, the largest raise in crypto history, in which various partners of the firms spoke highly of former FTX CEO Sam Bankman-Fried.
In a statement following the funding announcement in July 2021, Paradigm’s co-founder Matt Huang called Bankman-Fried a “special” founder who is “stunningly ambitious.”
Speaking to CoinStreetDaily, crypto lawyer Liam Hennessy, partner at Australian law firm Gadens, stated that it is a “tricky case,” and he questions “what obligation Sequoia and others” have to “completely separate investors.”
He added that despite the fact Sequoia’s due diligence wasn’t great, it doesn’t make it “liable to others.”
Hennessy believed it could be a case of “buyer beware,” as there is no suggestion that Sequoia wasn’t “playing within the regulatory rules.”
CoinStreetDaily contacted Sequoia Capital, Thoma Bravo and Paradigm for comment but did not receive an immediate response.
Related: Charity tied to former FTX exec made $150M from insider deal on FTT tokens: Report
A separate Feb. 15 Bloomberg report revealed that in the same court filing, Sam Bankman-Fried and his father, along with former FTX and Alameda Research executives Caroline Ellison, Nishad Singh and Gary Wang, were all issued with a subpoena — an order for a person to attend court — to provide further evidence.
It was stated that Joseph Bankman, Ellison, Wang and Singh are due to attend court on Feb. 16, while Sam Bankman-Fried is expected to attend on Feb. 17.