Normally it takes 3-10 years for a VC investment to reach an exit. In crypto, they get tokens that they’ve been able to dump to retail almost immediately. A16Z has a particularly suspicious shitcoin pipeline via their Coinbase board seat.
I hope SEC also ends up prosecuting investors who participated in these token offerings, and ideally also employees who got paid in tokens [1]. But I have no idea if there’s a legal basis because American securities law is designed to protect investors and doesn’t necessarily seem to account for the A16Z-style case where they’re essentially co-conspirators in the fraud: supplying crypto founders with money for marketing which pulled in retail dollars which ended up straight back to the VC’s and founders’ pockets.
[1] What difference does it really make if you’re a founder selling unlicensed securities, or an employee who signed a contract where you get paid in those unlicensed securities and then you dump them on retail investors? The SEC should look at these schemes which were popular with companies that hire on HN too.
Prosecuting those rubes for being among the victims? If there is evidence they pumped and dumped those tokens or didn't report their income correctly, then sure. But otherwise, why prosecute people for being stupid enough to accept payment crypto?
However, it doesn't seem that Sequoia et al had seats on the board, at least from this early 2022 press release [1].
Holding shareholders that are not directors accountable is extremely difficult. This is called "piercing the corporate veil" (worth a google) and is done only vary rarely and in cases of clear and outrageous misconduct attributable to the shareholders themselves—it's so rare because it's antithetical to the entire premise of the "limited" corporation.
[1] https://www.prnewswire.com/news-releases/ftx-us-derivatives-...
It didn't make any rational sense.
Unless the logical conclusion is that it means 'zero liability'.
https://www.economist.com/finance-and-economics/2013/05/04/b...
(Paywall, check google cache)