Venture firms accuse Curve founder of elaborate fraud – Crypto News – Crypto News
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Venture firms accuse Curve founder of elaborate fraud Venture firms accuse Curve founder of elaborate fraud

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Venture firms accuse Curve founder of elaborate fraud – Crypto News

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2 years ago

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ParaFi Digital Opportunities, Framework Ventures, and 1kx allege that curves Founder Michael Egorov carried out an elaborate fraudulent scheme that spanned six months, deceiving them in multiple ways.

Egorov allegedly misled the three venture capitalists starting in 2020 by making false promises of granting them a stake in Curve.

He is said to have used his network and reputation to gain trust and legitimize Curve, according to his most recent complaints filed in San Francisco in April. The litigation, first Reported by DL News, was originally filed in October.

As things unfolded, Egorov allegedly stole the plaintiffs’ trade secrets, which included valuable information like industry contacts, investors and investment know-how for Curve.

Curve Finance is a platform meant for exchanging tokens with low fees by using pools of similar assets. Liquidity providers to the platform are rewarded with the protocol’s native token CRV and trading fees.

Egorov is accused of fraudulently luring the plaintiffs to invest in his company. He then allegedly used their money to boost the value of Curve, denied them their promised shares and fled to Switzerland, renouncing his US residency. All this was done to keep the profits for himself, leaving the plaintiffs out in the cold, they claim.

The plaintiffs’ claimed that Egorov justified “significantly shifting the power [to govern Curve] in his favour. Instead of letting go of his power in the Curve DAO, he sold some CRV tokens to enrich himself while still keeping significant control, they added.

“Because he deposited plaintiffs’ funds into Curve’s liquidity pools, Egorov has received CRV tokens and fees as an incentive for providing liquidity,” attorneys for the VCs said.

Blockworks has reached out to ParaFi, Framework Ventures, 1kx and Egorov for comment.

Egorov seeks Swiss resolution for lawsuit

According to court documents filed on May 22, Egorov’s attorneys claim that the lawsuit filed in San Francisco is a response to ongoing litigation in Switzerland that began three years ago. They argue that Egorov’s company, Swiss Stake (Curve’s license holder), had the right to terminate that litigation.

Egorov is now requesting to either postpone or dismiss the lawsuit filed by the plaintiffs, arguing that the case should be handled in Switzerland, as the parties contractually agreed to resolve it there.

“To justify their blatant forum shopping, plaintiffs concocted a new and compelling story painting Egorov as an evil villain who duped three naïve VC firms into giving up ‘trade secrets’ (such as the names of widely known investors) and $1M in invested funds (that Swiss Stake promptly offered to return),” Egorov’s lawyers said in the filing.

“This tale of woe — which, in three years of Swiss litigation, Plaintiffs somehow never mentioned — is fiction,” they added.

They further claimed that Egorov established Swiss Stake in 2019 in Switzerland, as the country is known for being a leading hub for blockchain tech. And during their negotiations, the plaintiffs desired to invest in Swiss Stake and engaged their own Swiss legal representation to draft and finalize an investment agreement with Egorov, they said.

Swiss Stake ultimately decided to end the investment agreement involving the plaintiffs and began refunding the funds that investors had initially paid, according to them.

While other investors allegedly accepted the refunds, the plaintiffs refused them and instead filed a lawsuit in Zug against Egorov and Swiss Stake in August 2020. They claimed breach of contract and specifically referred to the Swiss forum selection clause.

A hearing on the matter is scheduled for July 19.

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