ParaFi, Framework Ventures, and 1kx sue Curve founder for fraud and handling of trade secrets

ChainCatcher news reports that ParaFi Capital, Framework Ventures, and 1kx have sued Curve founder Michael Egorov for allegedly engaging in fraudulent activities and mishandling trade secrets, resulting in financial losses for them. The three firms invested $1 million in Curve in 2020, after which Michael Egorov deposited these funds into Curve's liquidity pool, and the three VCs did not receive CRV tokens or refunds.

According to the lawsuit, plaintiff Michael Egorov designed the concept of Curve and developed a small prototype while employed by NuCypher in the U.S. To expand Curve, Michael Egorov needed VC investment and introduced his ideas to these three VCs. The plaintiffs are all users of the Curve platform and also decided to invest in Swiss Stake. Michael Egorov needed funding and the legitimacy provided by a California DeFi venture fund to launch his project, then made false statements regarding the deployment of its assets in the company Swiss Stake GmbH, which holds a Curve license. Egorov convinced the venture capital firms that their funds would be used to hire developers, lawyers, and other staff. However, Egorov had no intention of relinquishing control over Curve, locking up more CRV than he anticipated, and did not transfer power to Curve DAO, instead selling enough CRV tokens to generate profits while maintaining overwhelming control.

The lawsuit claims that Egorov enriched himself through fraud by depositing the plaintiffs' funds into Curve's liquidity pool. As a reward for providing liquidity, Egorov received CRV tokens and fees, and also sold CRV tokens worth millions of dollars (the plaintiffs argue that these tokens belong to them). The three VCs stated that they did not receive the promised equity in Swiss Stake, their nearly $1 million in funds was never returned, and they never received the CRV worth tens of millions of dollars that they claimed they were entitled to.

Michael Egorov's defense team argues that the allegations from the three VCs in the San Francisco court are the result of their ongoing lawsuit filed in Switzerland in 2020. (source link)