The CEO of Curve Finance, Michael Egorov, is currently embroiled in a legal battle as three prominent venture capital firms, ParaFi Capital, Framework Ventures, and 1kx, have filed a lawsuit against him in the Superior Court of California, San Francisco. The complaint accuses Egorov of fraudulently misappropriating trade secrets and defrauding the firms of nearly $1 million, all the while luring them with the false promise of a potential stake in Curve.
Curve Finance is a decentralized exchange operating on the Ethereum blockchain and ranks among the largest decentralized finance (DeFi) trading platforms, with approximately $4.07 billion in total locked value. It functions as a decentralized autonomous organization (DAO) controlled by the CRV token, which can be earned or purchased by contributing to Curve’s liquidity pools.
According to the complaint filed in April, the venture capital firms claim that Egorov engaged in an audacious and multifaceted scheme to defraud them over a six-month period starting in early 2020.
The plaintiffs further allege that Egorov misappropriated their trade secrets, which included crucial information instrumental to the development of Curve, such as key industry contacts, potential investors, and insights into managing investment rounds. Throughout this time, Egorov allegedly made false promises that the plaintiffs would reap the benefits of their collaboration with him, rather than Egorov solely benefiting from their efforts.
The lawsuit also reveals that Egorov relocated to Switzerland in an apparent attempt to shield himself from the legal consequences of his actions. Since 2020, the three venture capital firms have been pursuing a breach-of-contract case against Egorov and his company, Swiss Stake, in Switzerland.
Egorov’s lawyers responded to the allegations in a filing on May 22, contending that the fraud accusations stemmed from the termination of a contract between the venture capital firms and Swiss Stake.
They claimed that the so-called “trade secrets” were, in fact, widely known investor names. Furthermore, Egorov’s legal team stated that Swiss Stake promptly offered to return the approximately $1 million of invested funds.
In response to Egorov’s legal filing, law firm Latham & Watkins, representing ParaFi Capital, Framework Ventures, and 1kx, issued a statement emphasizing their confidence in the facts underlying the lawsuit. They expressed their regret that the situation had escalated to litigation but affirmed their determination to hold Michael Egorov fully accountable for his actions.
As the legal battle unfolds, the outcome will have significant implications for the DeFi industry and investor trust in decentralized platforms. The case underscores the importance of transparency, due diligence, and the enforcement of legal safeguards in the rapidly evolving world of decentralized finance.
