Michael Egorov, the CEO of decentralized finance (DeFi) firm Curve Finance, is being sued for fraud by venture capital firms ParaFi Capital, Framework Ventures and 1kx in the U.S.
A complaint filed in the Superior Court of California, San Francisco, alleges Egorov misappropriated trade secrets of the three VC firms, and defrauded the firms out of close to $1 million in funds while dangling the false promise of a possible stake in Curve to gain the investors’ trust and support.
The lawsuit, filed in April, also alleges that Egorov moved to Switzerland to insulate himself from the inevitable legal fallout. The three firms have been pursuing a breach-of-contract case in Switzerland against Egorov and his company Swiss Stake since 2020.
Curve Finance, a decentralized exchange built on the Ethereum blockchain, ranks among the biggest DeFi trading platforms, with some $4.07 billion in total locked value, according to DeFi Llama. Curve operates in the form of a decentralized autonomous organization (DAO), controlled by the CRV token, which can be bought or earned by contributing to Curve’s liquidity pools.
Beginning in early 2020, Framework Ventures, ParaFi Capital and 1kx claim that Egorov “engaged in a brazen, multi-faceted scheme to defraud” them over a six-month period, according to the complaint. The VCs also allege Egorov “misappropriated” the firms’ “trade secrets,” including “information that proved to be critical to the development of Curve, such as key industry contacts, potential investors, and knowledge of how to manage an investment round – all while falsely promising that Plaintiffs would benefit from the fruits of their labor, not just Egorov.”
The VC’s also claim Egorov offered to sell shares of Swiss Stake to Plaintiffs for close to $1 million (alleging that a combined $925,233.54 worth of USDC was sent to a wallet specified by Egorov), but had no intention of transferring shares of Swiss Stake to the firms.
Egorov’s lawyers said in May 22 filing that the allegations of fraud derive from the termination of a contract between the VCs and Swiss Stake, and that the “trade secrets” in question were really the names of widely known investors. Egorov’s side also claims Swiss Stake promptly offered to return the roughly $1 million of invested funds.
“To justify their blatant forum shopping, Plaintiffs concocted a new and compelling story painting Egorov as an evil villain who duped three naïve VC firms into giving up ‘trade secrets,’” according to a May 22 filing by Egorov’s lawyers. The case against Egorov amounts to “nothing more than a clever narrative,” his attorneys said.
Law firm Latham & Watkins, representing the three VC firms provided CoinDesk with a statement via email: “It is regrettable this has reached the point of litigation, but we strongly believe the facts are on our side. In that respect, the complaint speaks for itself. Our clients are resolved to seek full accountability of Michael Egorov for his behavior.”
Egorov’s lawyers, DLA Piper, had not responded to an emailed request for comment by press time.