Venture capital firms which backed FTX are now facing a class action lawsuit, claiming they faked the exchange's legitimacy to "leverage their professional reputations," Bloomberg reports, citing the complaint.
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The plaintiffs say Sequoia Capital, Thoma Bravo and Paradigm "portrayed" FTX as a "trustworthy and legitimate crypto exchange" as they wanted to capitalize on their investments.
FTX raised a total $1.8 billion in several funding rounds, including more than $100 million from Thoma Bravoin and over $250 million from Paradigm. Sequoia wrote down over $210 million of its investment in FTX shortly after the exchange went bankrupt. FTX's backers are accused of violations of state and federal law, including misrepresentation, false advertising and civil conspiracy.
Meanwhile, the Delaware Bankruptcy Court approved the sale of certain low-value assets of FTX. The approval applies to unencumbered investments with a valuation of up to $1 million, with an initial investment of no more than $5 million.
FTX, through subsidiaries including Alameda, invested about $5.3 billion in 475 deals. The amounts ranged from $100 million for Mysten Labs to $1 million in checks for Limit Break or Messari.
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