We - like the rest of the world - are still sorting through the riddle wrapped in a mystery inside an enigma that is the FTX fiasco. In FTX's case it's, so far, Tulipmania wrapped in the South Sea Bubble, inside the 1840's British Rail Mania - if they were all under the roof of a company formed in Paris to manage property in Mississippi around 1711.

Tulips in the Bahamas

In other words, a mass and mess of wild speculation for the sake of speculation, imagined currencies, paper thin companies, credulous investors, and the inevitable collapse. It may be some time before we can add Enron to the mix. Or, it might be tomorrow, this thing is unravelling fast.

While there's still a scarcity of reliable facts out there, we've noticed one and are willing to make a not-very-bold prediction for the coming weeks and months: there is a flood of shareholder actions - breach of fiduciary duty to start - already in the draft stage.

They won't be against FTX and Sam Bankman-Fried, they'll be against the venture capital firms that funded them. It's about due-diligence . . . or, rather, lack of it. Right now, as we write this, VCs across North America are doing one of two things: they're stridently explaining to the financial media how much and how long they conducted due diligence before investing, or, they're saying nothing. At all. The quiet VCs are the smart ones, for now.

Because: it’s been widely reported that FTX and Bankman-Fried did not allow due diligence. He did not allow for any concessions to his investors including the most basic of investor requirements – a seat on the board (at least).

According to the New York Times

In meetings to raise money for FTX over the last year, the entrepreneur left little room for negotiation, two investors said. FTX was his company, Mr. Bankman-Fried told them, and he planned to run it with little oversight. Interested investors should ‘support him and observe . . .’ Sam Bankman-Fried’s pitch to investors was not much of a pitch: It was a take-it-or-leave-it offer.

One prominent VC CEO met with Bankman-Fried and requested a ‘pitch deck.’ One was created on the spot in less than an hour. It was, of course, a mess. Still, they were willing to invest, they just requested what they always requested – a seat on the board.

The answer. “F*ck off.”

Still, more than 80 investors shrugged it off, went against their usual investment practices, and gave FTX $2 billion.

Create a cult of personality and mix in a chunk of FOMO (Fear of Missing Out) and you get otherwise [mostly] rational execs lining up to invest without doing any of the things that had been making them, their shareholders, and clients money for decades.

As the toxic effects of the FTX fiasco ripple out and the losses are calculated we have to believe that a flood of breach of fiduciary duty actions is going to drop all over the U.S. and Canada over the coming months.