By
Chimamanda U. Martha
April 24th, 2024
The judge dismissed the lawsuit against Egorov, stating that since the CEO does not live in California, the case should be handled elsewhere.
A California judge has thrown out a lawsuit against Michael Egorov, the Chief Executive Officer of decentralized finance (DeFi) platform Curve Finance. The judge rejected the case in part because Egorov was not resident in California when the alleged accusations happened.
In a Wednesday order, Judge Richard B. Ulmer Jr. said Egorov last lived in California in 2018. This means that California does not have jurisdiction over the case.
In June, three DeFi-focused VC firms filed a lawsuit against Egorov at the Superior Court of California in San Francisco. According to 1kx, Framework Ventures, and ParaFi Capital, Egorove misappropriated the firms’ trade secrets, defrauding them of nearly $1 million. The plaintiffs allege that Egorov gained their trust by falsely misrepresenting to them that they could get a stake in Curve.
Egorov Lawsuit Began in Switzerland
The California lawsuit is not the firms’ first attempt to go after Egorov. The firms filed a breach-of-contract suit against the CEO and his Swiss Stake company in Switzerland back in 2020. In the lawsuit, the plaintiffs said Egorov “engaged in a brazen, multi-faceted scheme to defraud” them. They said after an offer from Egorov to sell Swiss Stake shares for around $1 million, they sent a total of $925,233.54 USDC to Egorov. However, Egorov allegedly did not transfer the shares.
Interestingly, Egorov’s lawyers maintain that they are on the right side of the law. The attorneys, DLA Piper, said multiple Swiss courts have taken their side. According to them, the plaintiffs’ decision to try a US lawsuit was “perhaps to leverage the hostile crypto climate there”. Following Judge Ulmer Jr.’s rejection, DLA Piper said in a statement:
“We’re extremely happy for Michael that the Court understood the parties specifically agreed to resolve all disputes in Switzerland and correctly rejected the attempt to drag him into a California lawsuit. We fully expect Michael to prevail in Swiss courts, which have already expressed skepticism about Plaintiff’s claims.”
In response, the plaintiffs’ lawyers, Latham & Watkins, have noted that the dismissal was only procedural and not based on merits. They added:
“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.”
Outside of the lawsuit, there are certain concerns about Egorov’s loan positions totaling $100 million. These positions are allegedly backed by nearly 47% of Curve’s CRV circulating supply. Unfortunately, the CRV token’s performance has been poor, losing more than 40% over the last 3 months and nearly 25% in the past month. This has given rise to fears that the debts, at risk of liquidation, could cause problems for the DeFi sector. According to an X thread, Egorov has a 63.2 million USDT loan on Aave, backed by a $305 million CRV. There also is a 15.8 million FRAX loan on Frax Finance, backed by 59 million CRV.