FTX’s clients are suing the firm’s investors for lending “air of legitimacy” to the firm

FTX’s former clients are suing three venture capital and private equity firms, accusing them in a proposed class action lawsuit of fraudulently promoting the cryptocurrency company before it went bankrupt.

Sequoia Capital, Thoma Bravo and Paradigm were “encouraged” in 2021 and 2022 to disclose FTX due to the more than $550 million they invested in the company before its sudden collapse, according to a complaint filed Tuesday in San Francisco federal court. .

The clients said the defendants gave FTX “an air of legitimacy” by making sure they vetted its operations — with one Sequoia executive once saying “we’ve done our homework” — and deemed them “safe and protected” for cryptocurrency investors.

“Billions of dollars in customer assets have become victims of the greed of Bankman-Fried and his accomplices as the defendants,” the complaint states.

The lawsuit seeks unspecified damages for alleged violations of California consumer protection laws, as well as fraudulent solicitation, willful misrepresentation and civil conspiracy.

Previous lawsuits have accused celebrities including former football quarterback Tom Brady, basketball player Stephen Curry and actor Larry David of improperly tricking people into investing in FTX.

Sequoia, Thoma Bravo and Paradigm did not immediately respond to requests for comment Wednesday.

Source: Terra

Rose

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