or less ZachXBT Sued for Claiming Funds Drainage

ZachXBT Taken to Court for Libel

ZachXBT, a blockchain investigator, has been taken to court for libel by someone they accused of fraud, as per a June 16 social media post. The post states that Jeffrey Huang, who goes by “MachiBigBrother” on Twitter, has alleged that ZachXBT has harmed his reputation through inaccurate claims.

MachiBigBrother also made an announcement declaring that he is taking legal action against the on-chain sleuth.

ZachXBT dismissed the lawsuit as “groundless” and “a bid to stifle freedom of expression”. He declared his intention to “oppose” it.

In a thread in which he himself had posted, ZachXBT provided a link to the Medium post which is alleged to be defamatory. Entitled “22,000 ETH Embezzled and Over Ten Projects Failed: The Story of Machi Big Brother (Jeff Huang),” the article accused Huang of initiating “over 10 unsuccessful pump and dump tokens and NFT projects,” including the treasury management service Formosa Financial.

The article asserts that George Hsieh, co-founder of Formosa Financial, withdrew 11,000 Ether (ETH) from the company’s funds.

The article asserted that Hsieh then exited the venture, leaving other executives in control. According to ZachXBT, the money removed from the treasury was quickly sent to various other wallet accounts after that, including one that was also given funds from ENS domain harrisonhuang.eth.

By combining other blockchain information, ZachXBT determined that “these addresses are associated with Jeff Huang/Mithril.” ZachXBT attributed the draining of funds to Jeff Huang, pointing out that “This chart shows the ETH coming into the multisig before the two 11,000 ETH withdrawals were made by Jeff and George on June 22, 2018.”

Project Launches with $31.6M in Suspected Exit Scam

Cointelegraph has acquired the lawsuit filed on June 15 by Jeffrey Huang in the U.S. District Court for the Western District of Texas, Austin Division. According to the complaint, Huang’s lawyer asserts that his customer had not taken funds from the Formosa Financial Project, saying:

Moreover, Huang’s legal team asserted that the creators of the venture were likely the ones who pilfered the ETH from the treasury as ZachXBT’s statements “did not take into consideration the more plausible and evident explanation that insiders of the organization, rather than the Plaintiff as an external consultant, planned the transfers.”

The lawsuit additionally asserts that ZachXBT gains income from contributions because of his activity as an on-chain investigator, which it claims is the genuine explanation that he distributed the article.

ZachXBT Refutes Accusations

In his June 16 Twitter thread, ZachXBT refuted the accusations, claiming that Huang was attempting to “muzzle” him. “It’s disheartening that it has come to this,” ZachXBT said, “but I was aware that one day this could happen since the cost of speaking the truth is sometimes people don’t like what you have to say.”

ZachXBT has in the past exposed information regarding numerous crypto scams and exploits. On June 10th, he discovered activity related to $1 million in crypto stolen through Twitter phishing scams. On June 4th, he revealed calculations that approximately $35 million had been taken from an exploit of the Atomic Wallet app.