We, rightly, have a concept of "fiduciary duty" deeply embedded in our common law and in the practice of investing. That applies to all the people entrusted with the assets in question, from the pension fund manager to the VC firm to the firm receiving the investment. There's a difference between a bad or risky bet that doesn't pan out and violations of that duty like misrepresentation and self-dealing.

The blame should go to those who breached that duty. It seems that at minimum they engaged in misleading statements about the degree of progress they had made with their technology. That's certainly unethical and possibly fraudulent.