"Embezzling" VC's tokens to buy mansions? Curve founder sued by ParaFi and three other major crypto VCs

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The crypto world needs more judges. Following the SEC's lawsuit against Binance, crypto VCs have now embarked on their own legal journey.

According to DL News, three prominent crypto VCs—ParaFi, Framework Ventures, and 1kx—have recently filed a lawsuit in San Francisco against Michael Egorov, founder of Curve, alleging commercial fraud.

You may be familiar with this name. Recently, Michael Egorov and his wife Anna Egorov spent $41 million on Avon Court, a luxury mansion in Melbourne, setting the highest single real estate transaction record in Victoria this year. Last March, the couple also purchased an Italian-style mansion locally for $18.25 million.

The crypto bear market has done little to curb Michael Egorov’s lavish spending. However, VCs ParaFi, Framework Ventures, and 1kx claim they invested $1 million in Curve but have received no business returns.

First, let’s get to know Michael Egorov.

He is Russian, earned a bachelor's degree in applied mathematics and physics from the Moscow Institute of Physics and Technology, then moved to Australia, where he obtained a PhD in physics from Swinburne University of Technology and later a postdoctoral degree in physics from Monash University.

In 2013, he discovered Bitcoin; in 2015, he left LinkedIn to start a company, co-founding the blockchain privacy project NuCypher and serving as CTO. In 2016, the project secured seed funding from Y Combinator and later attracted investments from well-known crypto VCs such as Polychain.

While working at NuCypher, inspired by MakerDAO, Egorov began developing Curve in late 2019. By June 2020, he officially left NuCypher to go all-in on Curve.

To scale Curve, Michael Egorov needed VC funding—not only capital but also legitimacy through endorsement from reputable DeFi-focused venture funds. Thus, Egorov approached three VCs: ParaFi, Framework Ventures, and 1kx.

Ultimately, these three VCs chose to invest in Swiss Stake GmbH, a Swiss-based operating entity registered by Egorov. At the time, Egorov stated that the funds would be used to hire developers, lawyers, and other staff.

Now, the VCs allege in their lawsuit that Egorov never intended to relinquish control over Curve. He allegedly locked up significantly more CRV—Curve’s governance token—than expected, and instead of transferring power to the Curve DAO, he sold large amounts of CRV to profit while maintaining overwhelming control.

“Egorov profited from his fraudulent conduct,” the complaint states. “Because he deposited what should have been the plaintiffs’ funds into Curve’s liquidity pools, Egorov has received substantial amounts of CRV tokens and fees as rewards for providing liquidity.”

But at the core of the issue, the VCs did not receive the benefits they were promised. The venture firms claim they never received the agreed-upon equity in Swiss Stake, their nearly $1 million investment was never repaid, and they never received the thousands of dollars worth of CRV tokens they were entitled to.

Egorov has already sold tens of millions of dollars worth of CRV tokens—tokens the VCs believe rightfully belonged to them. Additionally, the VCs argue they missed out on valuable business opportunities, such as investing in Curve’s competitors.

We will continue to monitor how this case unfolds!