Eighteen leading venture capital (VC) investment firms, including Temasek, Sequoia Capital, Sino Global and Softbank, have been named<\/a>\u00a0as defendants in a class-action lawsuit filed in the United States District Court for the Northern District of California for their links to the now-bankrupt crypto exchange FTX.<\/p>\n The lawsuit, filed on Aug.7, alleged that the investment firms were responsible for \u201caiding and abetting\u201d the\u00a0FTX fraud<\/a>. The suit claims that the defendants used their \u201cpower, influence and deep pockets to launch FTX\u2019s house of cards to its multibillion-dollar scale.\u201d<\/p>\n The lawsuit states that the FTX cryptocurrency exchange violated several securities laws and stole customers\u2019 funds while the defendant VCs offered an elusive picture of the exchange, claiming they had done their due diligence. Thus, these VC firms directly \u201cperpetrated, conspired to perpetrate, and\/or aided and abetted the FTX Group\u2019s multi-billion-dollar frauds for their own financial and professional gain,\u201d the lawsuit claims.<\/p>\n While discussing the role of VC firms in aiding and abating FTX fraud, the plaintiffs cited the example of Temasek and its statement regarding the financial conditions of FTX. Temasek claims it conducted an eight-month-long extensive review<\/a> of FTX\u2019s finances, audits and regulatory checks, saying it found no red flags. The suit reads:<\/p>\n \u201cThe Multinational VC Defendants also made numerous deceptive and misleading statements of their own about FTX\u2019s business, finances, operations, and prospects for the purpose of inducing customers to invest, trade, and\/or deposit assets with FTX.\u201c<\/p><\/blockquote>\n The suit further alleged that these VC firms vouched for the safety and stability of FTX and advertised the exchange\u2019s purported attempts to become properly regulated.<\/p>\n Temasek was one of the early investors in FTX with a $275 million investment. However, after the collapse of the crypto exchange in November 2022, the investment firm wrote off its entire investment and even slashed compensation for the executives<\/a>\u00a0responsible for the FTX investment.<\/p>\n Related: <\/em><\/strong>Prosecutors will still consider Sam Bankman-Fried\u2019s alleged campaign finance scheme at trial<\/em><\/strong><\/a><\/p>\n Temasek, a Singapore state-backed investment firm, also puts the Singaporean government in the hot seat<\/a> over its failure of oversight.<\/p>\n The FTX collapse created a crypto contagion and cast a shadow of doubt on the entire crypto ecosystem leading to a drought in institutional crypto investment for months.<\/p>\n Magazine: <\/em><\/strong>Deposit risk: What do crypto exchanges really do with your money?<\/em><\/strong><\/a><\/p>\n<\/div>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-08\/ae1fe9e9-a3fc-4f10-8715-5795a9f64055.png\" "\\"\\"")