Several venture capital firms — including Menlo Park, California-based Sequoia Capital, Singapore's Temasek Holdings, Japan's SoftBank Group of Japan, and Hong Kong's Sino Global Capital — face a class action lawsuit due to their alleged involvement in the downfall of FTX.
What Happened: According to a complaint submitted to the U.S. District Court in Northern California, the firms were "aiding and abetting" FTX's efforts to gain public and investor confidence.
The firms either "knew or were reckless in not knowing that SBF’s entire crypto empire was a sham," referencing FTX's founder, Sam Bankman-Fried.
At least a dozen venture capital entities are named in the complaint, along with auditing firms Prager Metis and Armanino. Former FTX executives such as Bankman-Fried, as well as celebrity endorers like Tom Brady, Gisele Bündchen, Steph Curry and Kevin O’Leary.
“Without the multinational VC defendants, the largest financial fraud in U.S. history would not have occurred," the plaintiffs assert.
Benzinga reached out to several of the defendants for comment and has not heard back.
Why It Matters: Following FTX's bankruptcy, Bankman-Fried faced charges in December for wire fraud, conspiracy to commit fraud, and money laundering.
The U.S. Securities and Exchange Commission also claimed Bankman-Fried deceived investors and used the funds to purchase properties for himself and his relatives.
Read Next: FTX Bankruptcy Battle Turns Ugly As Management And Creditors Clash
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