I characterized the lawsuit is a fishing expedition because I saw no specific evidence in the complaint about what the VC firms actually knew—only assumptions based on rather general public statements from the VCs. And the complaints allege—and I think probably have to allege—actual knowledge of the fraudulent scheme against the depositors. The reason is that, as a general rule, the plaintiff has to establish that the defendant owed them a duty to do or refrain from doing something before negligence liability will attach.
Of course, you have to file the lawsuit in order to potentially get to discovery and start subpoenaing documents and deposing witnesses. It’s not an unreasonable fishing expedition to undertake, but I think the narrative that the VCs were sloppy, rushed, or underinvested on their due dilligence is much more likely than the complaint’s theory that they knew about the depositor fraud and actively worked to conceal it until FTX did an IPO and they unloaded their shares.
(I certainly do not think anyone in EA knew about the fraudulent scheme against depositors either.)
I characterized the lawsuit is a fishing expedition because I saw no specific evidence in the complaint about what the VC firms actually knew—only assumptions based on rather general public statements from the VCs. And the complaints allege—and I think probably have to allege—actual knowledge of the fraudulent scheme against the depositors. The reason is that, as a general rule, the plaintiff has to establish that the defendant owed them a duty to do or refrain from doing something before negligence liability will attach.
Of course, you have to file the lawsuit in order to potentially get to discovery and start subpoenaing documents and deposing witnesses. It’s not an unreasonable fishing expedition to undertake, but I think the narrative that the VCs were sloppy, rushed, or underinvested on their due dilligence is much more likely than the complaint’s theory that they knew about the depositor fraud and actively worked to conceal it until FTX did an IPO and they unloaded their shares.
(I certainly do not think anyone in EA knew about the fraudulent scheme against depositors either.)