Crypto venture capital firm Polychain has accused its former general partner, Niraj Pant, of engaging in a secret deal with portfolio company Eclipse Labs that violated the fund’s policies. An investigation by CoinDesk uncovered that Neel Somani, the former CEO of Eclipse Labs, promised Pant a stake in Eclipse tokens worth $13.3 million as an incentive for Pant to secure funding from Polychain. Polychain claims that Pant did not disclose this deal to the fund and later invested in Ritual, Pant’s AI startup.
The situation sheds light on the opaque dealings that often characterize the crypto industry’s fundraising landscape, where venture firms invest in projects in exchange for tokens instead of traditional equity. Polychain, founded by Olaf Carlson-Wee, accused Pant of making a backroom deal with Eclipse Labs, allocating him a significant percentage of Eclipse tokens without proper disclosure.
Eclipse Labs, known for building a blockchain that combines elements of Solana and Ethereum, received funding from Polychain for its pre-seed and Series A rounds. Pant’s involvement in securing these investments raised questions about conflicts of interest, as he later became a co-founder of Ritual, another Polychain portfolio company.
The story highlights the complexities and blurred lines in the crypto VC world, where token allocations play a crucial role in fundraising. In the case of Eclipse Labs, token promises were made to various stakeholders, including Pant, without full transparency. The episode underscores the challenges of navigating the evolving regulatory landscape in the crypto space.
Despite the controversy surrounding Pant’s undisclosed deal with Eclipse Labs, Polychain’s investment in the project has proven lucrative, with the stake increasing significantly in value. The incident raises important questions about ethics, disclosure, and accountability in the crypto industry, prompting a closer examination of the practices and policies within venture capital firms.
As the intersection of blockchain and artificial intelligence continues to drive innovation and investment, stakeholders must uphold high standards of transparency and integrity to maintain trust and credibility in the market. The case of Polychain, Niraj Pant, and Eclipse Labs serves as a cautionary tale for players in the crypto ecosystem, emphasizing the importance of ethical conduct and compliance with regulatory requirements.
The evolving nature of the crypto industry demands a proactive approach to governance and oversight, ensuring that investors, startups, and funds adhere to best practices and ethical standards. By learning from past incidents and enhancing transparency, the sector can foster sustainable growth and build a reputation for integrity and accountability in the long run.
If you have insights or information related to token allocations, VC funding, or ethical issues in the crypto space, feel free to reach out to investigative journalists for further investigation and analysis. The story of Polychain, Niraj Pant, and Eclipse Labs underscores the complexities and challenges inherent in the crypto fundraising landscape, urging stakeholders to prioritize ethics and compliance in their operations.