Former Partner of Prominent Crypto Venture Capital Firm Polychain Accused of Accepting Money Privately in Exchange for Investments, Highlighting Chaos in the Crypto Investment Sector

The well-known cryptocurrency venture capital firm Polychain has accused its former partner Niraj Pant and the company Eclipse Labs in its investment portfolio of engaging in undisclosed private transactions. This alleged policy violation incident has garnered widespread attention, shedding light on the common opaque practices in the fundraising process within the crypto industry.

Polychain's former partner Niraj Pant involved in secret dealings, exchanging commissions for investments

Polychain alleges that Niraj Pant reached a secret agreement with Eclipse Labs, violating the fund's policies.

According to a CoinDesk investigation, former Eclipse Labs CEO Neel Somani promised Pant $13.3 million worth of Eclipse tokens as an incentive to secure Polychain's financial support.

Undisclosed money dealings, lack of transparency with Polychain

Pant allegedly did not disclose this transaction to Polychain, which later invested in Pant's AI startup, Ritual. While Pant admits receiving "advisor" tokens from Eclipse Labs, he insists the deal was completed after Polychain's investment. This scenario highlights the secrecy of token transactions in the crypto industry.

Polychain Statement: Lack of disclosure before departure

Polychain stated that it was not aware of Pant's financial interests in Eclipse until his departure in 2023. The company emphasizes having robust policies to prevent conflicts of interest. A spokesperson for Polychain revealed that an investigation was conducted upon discovering this undisclosed transaction.

Investments by Eclipse Labs and Polychain

Founded by former Coinbase employee Olaf Carlson-Wee, Polychain is one of the largest crypto venture capital firms with over $11 billion in assets. Pant, as a key figure in the industry, played a significant role in guiding the company's investments in promising crypto startups. Eclipse Labs, as one of the portfolio companies, focuses on building blockchains integrating Solana and Ethereum technologies. In March 2024, Eclipse Labs raised $50 million before its mainnet launch.

Controversial token allocation

Internal documents and sources indicate that former Eclipse Labs CEO Neel Somani discreetly allocated 5% of the upcoming Eclipse tokens to Pant in September 2022, just after Polychain led Eclipse's $6 million seed funding round. Subsequently, this share was reduced to 1.33%, but based on recent fully diluted valuations, these tokens are still valued at $13.3 million.

Somani's role and controversial exit

Neel Somani resigned as CEO of Eclipse due to misconduct, reportedly promising Pant his advisory shares before the seed funding transaction was completed to encourage Pant to secure Polychain's investment and support.

Tokens over equity, a lawless realm

This incident underscores the complexity and sometimes chaos of crypto venture capital, where tokens often replace traditional equity in exchanges. It emphasizes the importance of transparency and adherence to ethical standards in the rapidly evolving crypto industry.

Polychain's policies and ethical standards

Polychain's policies require employees to disclose potential conflicts of interest and personal financial transactions. Despite the controversy, Pant remains involved in Ritual, another investment company of Polychain. Ritual aims to decentralize the execution of AI models and raised $25 million last November from Polychain and other investors.

The controversy between Polychain and Eclipse Labs reveals the intricate dynamics of crypto venture capital and the importance of upholding ethical standards. As the industry continues to grow, transparency and policy compliance will be key to building trust and integrity.