Two of the most senior partners at Chamath Palihapitiya’s venture capital firm Social Capital have been fired and hired lawyers after Palihapitiya accused them of improperly setting up a special purpose vehicle to market an investment in one of the firm’s portfolio companies.

Jay Zaveri, who was head of early-stage and venture investing, and Ravi Tanuku, head of public markets and M&A, were dismissed without warning on Sunday according to sources close to the situation.

Palihapitiya, a former Facebook executive also known as the “SPAC King” for his prolific backing of SPAC deals in 2020, claims he discovered during a recent partner meeting that Zaveri and Tanuku set up a special purpose vehicle to sell around $1 million of Social Capital’s convertible note investment in AI chip startup Groq without his knowledge.

Social Capital was an early investor in Groq, funding $52.3 million of a targeted $60 million convertible note in 2018. Groq has since raised over $300 million from investors like Tiger Global at a valuation topping $1 billion amid the AI boom.

Both Zaveri and Tanuku have denied the accusation, saying Palihapitiya approved the special purpose vehicle and that other Social Capital employees invested in it. Their lawyers state they acted with integrity and look forward to the truth emerging.

“A number of employees invested in and worked on the SPV. Mr Tanuku firmly believes that he has acted with the utmost integrity during his tenure at Social Capital and throughout his career, as will be substantiated when the full facts come to light,” according to Tanuku’s lawyer Scott Watnik from Wilk Auslander.

Zaveri’s firing was “unfair and undeserved. The firm’s leadership approved and participated in the investment that is now being used as a pretext to fire him,” according to his spokesperson.

Also read: The End Of An Era: Chamath Palihapitiya Winds Down Two SPACs

The ex-partners are considering options to reclaim carried interest potentially worth tens of millions they believe Social Capital owes them. It’s unclear if this could include suing Palihapitiya or the firm.

Social Capital said in a post on X that the firings were due to “employee-specific circumstances.”

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