According to a complaint filed late Tuesday in San Francisco
federal court, Sequoia Capital, Thoma Bravo and Paradigm were
"incentivized" in 2021 and 2022 to tout FTX by the more than $550
million they invested prior to its sudden collapse.
The customers said the defendants lent FTX an "air of
legitimacy" by vouching that they had examined its operations--with a
Sequoia executive once saying "we did our homework"--and found them
"safe and secure" for cryptocurrency investors.
"Billions of dollars' worth of customer assets became a
casualty of the greed of Bankman-Fried and of his co-conspirators, such as the
defendants," the complaint said.
The lawsuit seeks unspecified damages for alleged violations
of California consumer protection laws, as well as fraudulent inducement,
intentional misrepresentation, and civil conspiracy.
Earlier litigation accused celebrities like football
quarterback Tom Brady, basketball guard Stephen Curry and actor Larry David of
improperly inducing people to invest with FTX.
Sequoia, Thoma Bravo, and Paradigm did not immediately
respond on Wednesday to requests for comment.
Bankman-Fried is not a defendant.
The 30-year-old son of Stanford Law School professors has
pleaded not guilty to fraud and other charges for allegedly looting billions of
dollars from FTX customers. He is living with his parents as part of his $250
million bail package.
A Manhattan federal court hearing on whether to tighten bail
is scheduled for Thursday, after Bankman-Fried allegedly tried to communicate
improperly with potential government witnesses. © Reuters
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