The Protocol: Side-Dealing Accusations Put Crypto VC Funding in Spotlight
SIDE DEAL? Two months ago, the blockchain-development world was rocked by the news that Neel Somani, founder of the uber-modular blockchain project Eclipse, was stepping aside from his role in response to sexual misconduct allegations. Now, theres fresh accusations surrounding the projects fundraising. Crypto venture capital giant Polychain has accused Niraj Pant, a former general partner at the fund, of making a backroom deal with Eclipse that broke the funds policies, a scoop by CoinDesks Sam Kessler. According to three sources close to the situation and internal Eclipse documents reviewed by CoinDesk, Eclipses Somani quietly allocated Pant 5% of a forthcoming Eclipse crypto token in September 2022 just days after Pant directed Polychain to lead the companys $6 million pre-seed funding round. The allocation was eventually reduced to 1.33%, worth $13.3 million at the tokens most recent fully diluted valuation in a private investment round. Pant insists the arrangement was completely kosher because it wasnt finalized until September 2022 the month after Polychain had already invested in Eclipse. Under a copy of an agreement obtained by Kessler and signed by Somani, Pants Psychological Operations Co. would receive a grant of Eclipses tokens in exchange for periodic teleconference sync meetings as requested by Eclipse. Somani told his inner circle that the generous token grant was meant to incentivize Pant to secure Polychains cash and the veteran VCs coveted endorsement, according to two people familiar with the matter. Polychains statement to CoinDesk grants a rare insight into the sausage-making process of the cozy world of crypto VC firms and the projects they fund, Kessler wrote. Snarky posters on the social-media platform X snickered ironically that they were shocked to learn that such practices might go on in the crypto fundraising scene.
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