The founder is said to have misappropriated trade secrets.
The founder of Curve Finance, Michael Egorov is being sued by three Venture capital firms: ParaFi, Framework Ventures, and 1kx.
They have accused the founder of engaging in deceptive practices that have caused them losses after investing in Curve Finance.
Curve Finance under legal fire
As the crypto space grapples with a series of regulatory battles, a weighty lawsuit is underway in San Francisco. Three top crypto venture capital firms—ParaFi, Framework Ventures, and 1kx have sued Curve Finances founder Michael Egorov in a San Francisco court.
The trio have accused the founder of deceptive practices and the misappropriation of trade secrets that have caused the firms financial losses.
The lawsuit claims that the VCs have yet to receive their promised equity, and their investments of nearly $1M have not been returned. They also alleged that they have been deprived of millions of dollars’ worth of CRV tokens which they are entitled to.
Egorov’s lawyers have called the lawsuit a blatant concoction of narratives to make the Curve Finance founder look bad.
“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 $1 million in invested funds (that Swiss Stake promptly offered to return),” Egorov’s lawyers say in the litigation, filed last month, which follows a series of filings in the California Superior Court from October.
“This tale of woe — which, in three years of Swiss litigation, plaintiffs somehow never mentioned — is fiction. It is nothing more than a clever narrative fabricated to save plaintiffs’ floundering Swiss litigation yet undermined by records that plaintiffs themselves cite,” they say.
“Egorov needed capital”
Michael Egorov created the concept for Curve Finance while still at NuCypher in the US. The founder developed a small-scale prototype and needed funds to expand.
To expand, he pitched his concept to the three VCs who agreed to invest.
“Plaintiffs, each of whom were users of the Curve platform, decided to invest in Swiss Stake because they saw a unique and potentially profitable opportunity to help develop a highly successful automated market-maker,” the lawsuit filed by the VCs says.
“Egorov needed capital. He needed the legitimacy provided by California-based DeFi venture funds to get his project off the ground,” the VCs claim in the filing.
The VCs claim that Egorov told them that the fund raised will be used to hire developers, staff, lawyers, and other staff. But his promise to relinquish control over the project didn’t come to pass. He justified seizing power over the company by explaining that he locked up more CRV tokens than he intended.
Rather than relinquishing, the founder sold just enough CRV tokens to generate profits while maintaining control over Curve Finance.
They alleged that they have lost business opportunities with Curve’s competitors “while Egorov was stringing them along.”
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