It was only a matter of time before frustrated customers of the fallen crypto exchange FTX went after its deep-pocketed venture backers. Indeed, the most surprising thing about a class-action lawsuit flagged earlier by Bloomberg — one that accuses Sequoia Capital, Paradigm, and Thoma Bravo of promoting FTX to the detriment of its users — is that it was filed yesterday and not sooner.
Still, VCs at every firm had better hope that nothing comes of it or the entire venture industry is in big trouble. A trial — even a settlement — could have widespread ramifications.
Here’s the potential problem: the new complaint specifically accuses the three firms of bestowing FTX with the “air of legitimacy” through their various actions, including a glowing piece about FTX found …
