The legal battle between Curve Finance founder Michael Egorov and prominent decentralized finance (DeFi) venture capitalists (VCs) has taken a new turn, with recent developments adding pressure to an already contentious situation. The dispute has now been taken to the US soil in an apparent effort for the complainants to capitalize on the country’s hostile environment for cryptocurrencies.
Swiss Lawsuit Raises Stakes
The venture capitalists involved, ParaFi Capital, Framework Ventures, and 1kx, have been pursuing legal action against Egorov in Switzerland for approximately three years. The Swiss lawsuit accuses Egorov of breach of contract, alleging that he misused the funds provided for business operations and failed to honor the agreed-upon equity and CRV token distribution.
The case remains ongoing and is in its early stages, according to the investors’ attorney, Nima Mohebbi of Latham & Watkins.
VCs Seeking US Jurisdiction
With their efforts in Switzerland yielding limited success, the VCs have now turned their attention to the United States based on a report. It is speculated that they are leveraging the perceived hostile regulatory climate surrounding cryptos to bolster their case.
In October 2022, the VCs filed a lawsuit in San Francisco, claiming that Egorov committed fraud, misappropriated trade secrets, and should be held accountable for his conduct.
Egorov’s Defense
Egorov, on the other hand, maintains that he terminated the investment contract within his rights and argues that the jurisdiction for the agreement lies in Switzerland. He asserts that the investors failed to fulfill their obligations by not providing the necessary paperwork and funds within the agreed timeframe.
Egorov’s attorneys at DLA Piper LLP contend that the investors promptly filed a suit against him in Swiss courts instead of providing wallet information for a refund.
Control and Governance Dispute
At the core of the dispute lies the question of control and governance of Curve Finance. The VCs claim that Egorov retained complete control of the platform, circumventing the agreed-upon distribution of governance tokens.
The investors also accuse Egorov of orchestrating the accelerated launch of the decentralized autonomous organization (DAO) to impede their ability to seek remedies for his alleged fraudulent actions. The complainants argue that the respondent’s decision to incorporate a Swiss forum selection clause was an attempt to evade US regulators and complicate potential legal claims.
Current Status of the Legal Proceedings
Both the Swiss and US lawsuits are currently ongoing. Egorov’s attorneys have responded to the US lawsuit by requesting the court to enforce the forum selection clause and dismiss the case.
The arguments put forth include the investors’ failure to fulfill their obligations and the absence of evidence to support the claim that the forum selection clause was a result of fraud.
Final Thoughts
The legal battle between Curve Finance founder Michael Egorov and the venture capitalists has intensified, with legal actions being pursued in both Switzerland and the United States. As the case unfolds, the outcome will have significant implications for the future of DeFi and the relationship between founders and venture capitalists in the crypto space. The proceedings are still ongoing, and it may take some time before a resolution is reached.