Top Crypto VC Says Ex-General Partner Made Undisclosed Side Deal With Portfolio Company

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Sam is CoinDesk's deputy managing editor for tech and protocols. He reports on decentralized technology, infrastructure and governance. He owns ETH and BTC.

Crypto venture capital giant Polychain has accused Niraj Pant, a former employee, of making a backroom deal with portfolio company Eclipse Labs that broke the fund's policies.

Pant has since become a prominent figure in the crypto industry, currently serving as co-founder of the blockchain AI startup Ritual, another portfolio investment of Polychain's. Polychain told CoinDesk it was unaware that Pant had a financial stake in Eclipse until after he left the firm in 2023. The fund said he should have disclosed the deal"Polychain was unaware of the financial relationship between Eclipse and Niraj Pant until after his departure from the firm," a Polychain spokesperson said in an email to CoinDesk."Polychain has robust policies and procedures surrounding employees serving in advisory roles. Following Mr.

Somani told his inner circle that the generous token grant was meant to incentivize Pant to secure Polychain's cash and the veteran VC's coveted endorsement, according to two people familiar with the matter. This setup isn't atypical. Crypto investors frequently offer cash in exchange for tokens rather than traditional equity, and companies rarely disclose these arrangements to the public, lest they arm financial regulators with ammunition in their fight to classify cryptocurrencies as investment securities.

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