FTX Lawsuits Pile Up: Silvergate Bank, Sequoia Capital, Paradigm, Face Litigation
Crypto exchange FTX, which went bankrupt last year, left a trail of lawsuits in its wake. Major banks and venture firms face legal action for their alleged role in promoting or enabling Sam Bankman-Fried’s fraud. Some of the companies recently embroiled in lawsuits include Sequoia Capital, Thoma Bravo, Paradigm, and Silvergate Bank. On Feb. 14, lawyers representing a San Francisco-based FTX user filed a proposed class-action lawsuit against the major bank. The lawsuit accuses Silvergate of participating in a “multibillion-dollar fraudulent scheme” by Sam Bankman-Fried (SBF). According to the plaintiff, Silvergate Bank and its parent company Silvergate Capital Corporation knew about fraud in FTX. They alleged that the companies, and their CEO Alan Lane, knew about Alameda Research’s use of FTX customer funds. Despite that, they allegedly concealed “the true nature of FTX” from its customers. In early January, Bloomberg reported that the US Justice Department is looking into Silvergate Capital Corp.’s dealings with FTX and Alameda Research. This is allegedly part of a larger probe to determine what banks and other financial institutions knew about SBF’s fraud. Another class-action lawsuit set sights on Sequoia Capital, Thoma Bravo, and Paradigm. According to Bloomberg, the lawsuit alleges venture firms boosted FTX’s legitimacy with their investments. Venture firms participated in a 2021 marketing campaign and promoted their multi-billion dollar investments in FTX entities. This campaign added an “air of legitimacy” to the now-bankrupt exchange. As a result, the lawsuit alleges that regular investors underestimated the risk of holding their money in FTX. The class action lawsuit claims the venture firms are guilty of misrepresentation, false advertising, and civil conspiracy, among other violations. After the FTX collapse, Sequoia attracted massive criticism for its earlier praise of Sam Bankman-Fried. In a since-deleted profile on their site, the venture firm praised SBF for playing video games during his investment pitch. All three venture firms in the lawsuit lost millions in the FTX collapse. Thoma Bravo invested more than $100 million in the exchange, while Paradigm invested $278 million. In November, Sequoia marked down its $214 million investment in FTX to zero. Previous lawsuits targeted celebrities who promoted the exchange, including Tom Brady, Larry David, and investor Kevin O’Leary. These lawsuits claimed that celebrity sponsors enticed inexperienced investors to put their money in FTX. Tom Brady was one of the most visible FTX sponsors. The star quarterback and his wife, Gisele Bundchen, allegedly put their $650 million fortune in the exchange. Investor and former “Shark Tank” star Kevin O’Leary was a paid spokesperson for FTX. He defended SBF even after the FTX collapse, saying he would still back SBF’s future ventures. Comedian Larry David promoted FTX in a 2022 Super Bowl ad as a “safe and easy way to get into crypto.” These lawsuits show that the fallout from the FTX collapse is not yet over. Moreover, they show that investors want to make institutions accountable for their role in the crash.
Silvergate Bank Knew FTX Was Comingling Funds: Class Action Lawsuit
Sequoia Capital, Thoma Bravo, and Paradigm Investments Class Action Lawsuit
Celebrity Lawsuits: From Tom Brady to Larry David
On the Flipside
Why You Should Care
Read more: https://dailycoin.com/ftx-lawsuits-pile-up-silvergate-bank-sequoia-capital-paradigm-face-litigation/
Text source: DailyCoin.com
