FTX Investors sue Sequoia Capital, Thoma Bravo and Paradigm

Involving venture and private investment firms, including Sequoia Capital, Thoma Bravo and Paradigm, a lawsuit has been filed against the bankrupted cryptocurrency exchange FTX over the creation of legitimacy. Bloomberg reports.

According to судебным документам, in 2021 the firms promoted their own investments of hundreds of millions of dollars in FTX-related entities, creating around the latter an aura of legitimacy.

The complaint notes the defendants’ statements about thorough checks of FTX’s operations and assurances of the exchange’s safety.

Sequoia Capital acknowledged loss of $213.5 million on its investments in FTX. Thoma Bravo invested more than $100 million in the exchange, and Paradigm more than $250 million. The latter later issued a “deep regret” over that funding.

“As a result of substantial investments by the defendants in the FTX entities, each of them had an interest in using their professional reputation and media access to portray FTX as a reliable and legitimate crypto exchange,” the complaint states.

Investors also alleged various violations of law, including misrepresentation, false advertising and civil conspiracy.

The companies named in the suit have not yet publicly commented on the matter.

As Crypto Fund Research estimates, the aggregate losses of crypto funds from the FTX bankruptcy could reach up to $5 billion.