Three prominent venture firms, ParaFi Digital Opportunities, Framework Ventures, and 1kx, have filed a lawsuit against Curve founder Michael Egorov, alleging an extensive fraudulent scheme and deception. The plaintiffs claim that Egorov misled them with false promises of a stake in Curve and subsequently stole their trade secrets. Egorov is further accused of using the plaintiffs’ funds to boost Curve’s value, denying them their promised shares, and fleeing to Switzerland.
Allegations of Fraudulent Scheme and Deception
ParaFi Digital Opportunities, Framework Ventures, and 1kx, prominent venture firms, have recently filed a lawsuit accusing Curve founder Michael Egorov of carrying out an elaborate fraudulent scheme spanning six months. The lawsuit, initially filed in October and reported by DL News, alleges that Egorov deceived the plaintiffs in multiple ways, starting in 2020, by making false promises of granting them a stake in Curve, a platform designed for token exchange with low fees.
Egorov is accused of leveraging the reputation and network of venture capitalists to gain trust and legitimize Curve. However, as events unfolded, he purportedly stole valuable trade secrets from the plaintiffs, including industry contacts, investor information, and investment know-how. The plaintiffs claim that Egorov used their funds to boost the value of Curve, denied them the promised shares, and subsequently fled to Switzerland, renouncing his US residency. The alleged motive behind these actions was to retain the profits for himself, leaving the plaintiffs empty-handed.
Exploitation of Power and Control
The plaintiffs argue that Egorov unjustifiably “significantly shifted the power [to govern Curve] in his favor.” Instead of relinquishing his control in the Curve DAO, he allegedly sold CRV tokens to enrich himself while still maintaining significant control over the platform. Attorneys representing the venture capitalists stated that Egorov received CRV tokens and fees as incentives for providing liquidity by depositing the plaintiffs’ funds into Curve’s liquidity pools.
In response to the allegations, Egorov’s lawyers have claimed that the lawsuit filed in San Francisco is a retaliatory action against ongoing litigation in Switzerland that began three years ago. They argue that Egorov’s company, Swiss Stake, which holds the license for Curve, had the right to terminate the Swiss litigation. Egorov now seeks either a postponement or dismissal of the plaintiff’s lawsuit, asserting that the case should be handled in Switzerland, as the parties had contractually agreed to resolve any disputes there.
Dueling Narratives and Legal Proceedings
Egorov’s legal team contends that the plaintiffs engaged in forum shopping, fabricating a new and compelling story to paint Egorov as an “evil villain” who deceived them. They claim that the plaintiffs never mentioned this narrative throughout the three years of ongoing Swiss litigation. Egorov’s lawyers maintain that Swiss Stake was established in Switzerland in 2019, given the country’s reputation as a leading hub for blockchain technology. They also argue that during negotiations, the plaintiffs expressed their desire to invest in a Swiss Stake and enlisted their own Swiss legal representation to finalize an investment agreement with Egorov.
According to Egorov’s legal team, Swiss Stake decided to terminate the investment agreement involving the plaintiffs and began offering refunds for the funds initially invested. While other investors reportedly accepted the refunds, the plaintiffs declined them and instead filed a lawsuit in Zug, Switzerland, in August 2020. The plaintiffs alleged a breach of contract, citing the Swiss forum selection clause. A hearing on the matter is scheduled for July 19, when the parties will present their arguments regarding the jurisdiction and resolution of the case.
Conclusion
Prominent venture firms ParaFi Digital Opportunities, Framework Ventures, and 1kx have filed a lawsuit accusing Curve founder Michael Egorov of orchestrating an elaborate fraud scheme. The plaintiffs allege that Egorov deceived them by making false promises of granting them a stake in Curve and subsequently stole their trade secrets, including valuable industry contacts and investor information. Egorov is accused of using the plaintiffs’ funds to benefit himself and renouncing his US residency to evade accountability.
