Deadly ricochet? It’s been almost 10 months since the huge house of cards in the empire of Sam Bankman-Fried (SBF) collapsed with a bang. It now appears that major institutional investment funds are caught up in the turmoil of the bankruptcy of FTX. Indeed, a class action has been filed against 18 (!) large investment funds, for « complicity » in fraud with Sam Bankman-Fried.
Will FTX’s fraudulent collapse drag these great funds into the abyss?
Although its battery of lawyers is looking for the slightest legal loophole to limit the damage, Sam Bankman-Fried still faces 8 counts of indictmentof the 13 charges brought against him. Several of these were for defrauding his customers of FTXor those of his other company, Alameda Research.
And this is no longer without consequences for investment funds who had the misfortune to believe this salesman’s fine words. Indeed, on Monday August 7, 2023, a complaint was filed in the U.S. District Court for the Northern District of California. More specifically, it concerns a class action (class action) against nearly twenty venture capital (VC) companies.
« Plaintiffs, on behalf of themselves and all others similarly situated, sue Defendants for: (…) 1) aiding and abetting, and/or actively participating, in FTX Group’s massive multi-billion dollar worldwide fraud. (…) 2) promoting, offering or selling securities (financial securities) such as (…) FTX’s native cryptocurrency token (the FTT), which caused substantial injury to the plaintiffs. »
Excerpt from the class action complaint against 18 investment funds accused of « aiding » the FTX fraud.
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Temasek, Sequoia Capital and Softbank in the same basket as SBF
When we look in detail at the 18 major venture capital firms accused in this complaint, we find some very interesting ones. big names of the investment world. Temasek, Sequoia Capital, Sino Global and Softbank (among others) are all unwillingly embarked on the « FTX Titanic ».
The attack is particularly violent against Temasek. The Singapore-based fund was one of the first major investors to make the mistake of believing SBF’s promises. Temasek had bet big ($275 million) in the early days of FTX.
» [Les accusés] also made numerous misleading and deceptive statements about FTX’s business, finances, operations and prospects, in an effort to entice customers to invest, trade and/or deposit crypto-assets with FTX. They vouched for the security and stability of the platform (…), and otherwise promoted the fabricated integrity of the FTX Group and Sam Bankman-Frid. »
Excerpt from the collective complaint
Like a grounded oil tankerFTX and SBF continue to viscously splash all those who, believing in their false promises, have approached them. With a new top executive of Sam Bankman-Fried’s inner circle of close friends who has just admitted his faults by pleading guiltythe ex-leader and founder of the cursed group may himself find it increasingly difficult to claim his innocence. Especially if the lawyers of these 18 major investment funds start exposing more of SBF’s lies, in an attempt to clear their own clients.
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