Curve founder ‘pleased’ judge threw out case: VCs had ‘no basis to drag me into a California lawsuit’

A California judge has rejected a lawsuit filed against Curve founder Michael Egorov on the basis that it’s the wrong jurisdiction to try him in.

According to the motion, filed September 6, Egorov has not lived in California since 2018, well before the alleged wrongdoing, which took place in 2020.

“I’m pleased,” Egorov told DL News. “The court agreed with me that the parties all contemplated Switzerland would be our base of operations and that plaintiffs had no basis to drag me into a California lawsuit.”

In June, three venture capital firms — ParaFi, Framework Ventures, and 1kx — accused Egorov of engaging in deceptive practices and misappropriation of trade secrets, resulting in financial damages. “Egorov has grown rich from his fraud,” the lawsuit said.

Egorov sold the trio a stake in Swiss Stake GmbH, the Swiss-registered entity behind Curve Finance, the lawsuit said. But the VCs claim that they never received the promised equity in Swiss Stake, and that their nearly $1 million in funding was never returned.

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“The bottom line is, after entering into an agreement and using our clients’ funds, Egorov refused to honour his promises and contractual obligations,” Nima Mohebbi, partner at Latham & Watkins, the law firm representing the VCs, told DL News in June.

Now that the California suit has been axed, Latham & Watkins says it will continue to pursue legal action against Egorov in Switzerland.

“The court did not dismiss the claims on the merits — it merely made a procedural determination that the claims ought to be brought in Swiss court,” Mohebbi said in a statement shared with DL News.

“Our clients’ Swiss lawsuit was only recently initiated and Mr. Egorov has already been ordered to testify in that matter.”

Mounting pressure

Latham & Watkins’ lawsuit is one of several controversies to hit the Curve founder this year.

Over the summer, $80 million worth of loans Egorov took out on DeFi lending platforms came under threat of liquidation when the CRV token collateral he put up against them declined in value.

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Many in DeFi worried that if Egorov’s loans were liquidated, the CRV token collateral might drop in value so much that it couldn’t be sold for enough to pay back lenders, creating millions of dollars worth of bad debt.

Then in August, Curve Finance suffered a series of hacks costing liquidity providers $61 million, which increased the downward pressure on the CRV token price.

In response, Egorov sold over $64 million worth of his CRV stash in over the counter deals to prop up the loans. Buyers included market makers Wintermute and DWF Labs, as well as Tron founder Justin Sun.

Case moves to Switzerland

As Latham & Watkins’ Swiss lawsuit against Egorov comes into focus, Mohebbi said he’s optimistic it will bear fruit.

“We remain confident we will hold him accountable and that our clients will be rightfully given what they were promised — a stake in the Curve platform,” Mohebbi said.

Egorov sees things differently.

He said the Swiss courts have “expressed scepticism” about the plaintiffs’ claims.

“I remain focused on building innovative and valuable products for the DeFi world,” he said.

The two co-founders of DL News, who aren’t mentioned in the lawsuits, were previously core contributors to the Curve protocol.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out to him with tips at tim@dlnews.com.

Disclosure: Tim holds over $1,000 worth of Ether, Swell staked Ether, Redacted Cartel, and GMX. He also holds an insignificant amount in NFTs.