Cryptocurrency venture capital powerhouse Polychain has accused its former general partner, Niraj Pant, of violating company policies through an undisclosed deal with portfolio company Eclipse Labs.
This revelation, stemming from a CoinDesk investigation, sheds light on the often murky world of crypto venture capital and token allocations.
According to sources close to the situation and internal documents reviewed by CoinDesk, Neel Somani, the former CEO of Eclipse Labs, quietly allocated Pant 5% of a forthcoming Eclipse crypto token in September 2022.
This allocation came just days after Pant directed Polychain to lead Eclipse’s $6 million pre-seed funding round. The stake was later reduced to 1.33%, still worth an estimated $13.3 million based on Eclipse’s most recent private investment round valuation.
Polychain, founded by Olaf Carlson-Wee and managing over $11 billion in assets, is one of the most prominent crypto venture firms. Pant served as a general partner at Polychain from 2017 to 2023, playing a key role in directing the firm’s investments in crypto startups.
The controversy centers around the timing and disclosure of Pant’s token allocation. Polychain claims it was unaware of Pant’s financial stake in Eclipse until after he left the firm in 2023.
The company stated,
“Polychain has robust policies and procedures surrounding employees serving in advisory roles. Following Mr. Pant’s departure from Polychain, the firm became aware that he violated its policies and investigated the matter.”
Pant, however, maintains that the arrangement was legitimate, asserting that it wasn’t finalized until September 2022 – after Polychain had already invested in Eclipse.
He shared legal documents with CoinDesk showing his “advisory” allocation of Eclipse tokens was revised to 1.33% in 2024 but declined to comment on the size of his original stake or why it was altered.
This situation provides a glimpse into the unique fundraising norms of the crypto industry, where digital tokens are often granted alongside or instead of traditional equity.
Eclipse Labs, which builds a layer-2 blockchain combining elements of Ethereum and Solana, exemplifies this trend. Most of its investors were promised a cut of Eclipse’s yet-to-be-launched token rather than traditional equity.
The opacity of these arrangements is not uncommon in the crypto space. Companies rarely disclose token allocation details publicly, partly to avoid potential regulatory scrutiny.