Crypto VC trio lose appeal in legal battle against Curve founder

The legal saga between decentralised exchange Curve’s founder Mikhail Egorov and three crypto venture capital heavyweights has taken another twist. A California appeals court upheld the dismissal of the VCs’ lawsuit on the grounds that the state is not the right place for the case.

The legal tussle dates back to June 2020, when VC firms ParaFi, Framework Ventures, and 1kx invested $3 million into Swiss Stake GmbH, the company behind Curve. By August 2020, Egorov had canceled the investment, claiming missed deadlines, and allegedly withheld the promised equity.

The lawsuit, filed in California in October 2022, argued Egorov engaged in fraud and misappropriation. Egorov denied the allegations.

In September 2023, a San Francisco judge threw out the lawsuit, ruling the state wasn’t the right place for the case. The VC firms appealed the decision, but the California Court of Appeal has now backed that earlier decision.

“They can continue objecting and appealing, but text by the court is strong,” Egorov told DL News.

In their appeal, the VCs claimed Egorov lied about when he moved to Switzerland, citing inconsistencies in his declarations and messages.

But the court found it undisputed that Egorov moved from Washington to Switzerland, regardless of whether it was in March or August 2020, the documents show.

“To the extent plaintiffs provided any detail to the trial court, they identified a single area of inquiry: ‘Egorov’s contradictory’ and purportedly ‘false statements’ regarding ‘the nature and scope of his California contacts,’” Judge Richard B Ulmer said. “However, any inconsistencies, even if false, would not give rise to jurisdictional facts.”

Egorov’s lawyers said in the litigation, filed in May 2023, that the VCs engaged in “blatant forum shopping.”

The VCs’ complaint in 2023 said that Egorov convinced them “through fraud to agree to a Swiss forum-selection clause in the investment agreements.”

“Egorov then fled the United States for Switzerland at around the same time that he executed the final steps of his scheme … seeking to evade the jurisdiction of the US courts.”

The appeals court ruled that Egorov’s limited and indirect interactions with California did not meet the “minimum contacts” required for the state to exercise jurisdiction over him. VCs’ efforts to build a business relationship with Egorov did not constitute purposeful conduct by him toward California, the judge said.

Egorov was introduced to ParaFi and Framework Ventures by 1kx, which had no ties to California, and subsequent communications were instigated by the VCs.

“Egorov never visited California to market Curve, to seek out investors, or even to meet with plaintiffs during negotiations,” the judge said.

Attorneys for the VCs did not immediately respond to a request for comment.

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