The blockchain researcher; ZachXBT, it’s been defendant for defamation by one of the people he accused of fraud, according to a June 16 post on social media. According to the post, Jeffrey Huang, known as “MachiBigBrother” on Twitter, has accused ZachXBT of damaging his reputation with false accusations.
MachiBigBrother too public an ad stating that he was going to sue the on-chain detective.
A year ago, @zachxbt published a Medium article about me that damaged my reputation.
Today, I have filed a defamation lawsuit against him in the United States District Court for the Western District of Texas.
— Machi Big Brother (@machibigbrother) June 16, 2023
ZachXBT responded to the lawsuit calling it “unfounded” and “an attempt to chill free speech.” He vowed to “fight back” against her.
In a thread in response to his own post, ZachXBT linked to the Medium post which is accused of being defamatory. Titled “22,000 ETH Embezzled and Over Ten Projects Failed: The Story of Machi Big Brother (Jeff Huang)”, Article accused Huang of launching “more than 10 failed token and NFT pump and dump projects,” including treasury management service Formosa Financial.
One of the claims made in the article is that Formosa Financial co-founder George Hsieh withdrew 11,000 Ether (ETH) from the project treasury:
“Formosa Financial took a turn for the worse when two withdrawals of 11,000 ETH each were made from the project’s treasury wallet on June 22, 2018. Unbeknownst to investors, co-founder George Hsieh acting as sole director of the company , pushing for a share buyback through himself, running on both sides.”
The article claimed that Hsieh later left the project, leaving other managers in charge. According to ZachXBT, the funds drained from the treasury were sent to numerous other wallet accounts soon after, including one that also received funds from the ENS domain; harrisonhuang.eth.
Combined with other blockchain data, ZachXBT concluded that “these addresses link to Jeff Huang/Mithril.” ZachXBT blamed Jeff Huang for the stolen funds, stating: “This chart shows ETH inflows from angel/private round funds into the multisig before Jeff and George made the two withdrawals of 11,000 ETH on June 22, 2018. “.
Cointelegraph has obtained the lawsuit filed on June 15 on behalf of Jeffrey Huang in the United States District Court for the Western District of Texas, Austin Division. In it, Huang’s attorney asserts that his client did not drain funds from the Formosa Financial Project, stating:
“Not only did Plaintiff not embezzle funds from the Formosa Financial project, but he never had control of any Formosa Financial funds, making embezzlement effectively impossible. In fact, based on the information available, Defendant fully understood that As a mere outside adviser to the Formosa Financial project, the plaintiff would have no way of directly accessing the allegedly stolen funds in the first place.”
Besides, Huang’s legal team claimed that the founders of the project were most likely the ones who stole the ETH from the treasury, as ZachXBT’s arguments “fail to account for the much more likely and obvious explanation that company insiders, rather than an outside advisor like Claimant, coordinated to orchestrate the transfers.”
The lawsuit also claims that ZachXBT earns money from donations as a result of his work as an on-chain detective, which he alleges is the real reason he published the article.
In his June 16 Twitter thread, ZachXBT denied these accusations, stating that Huang is trying to “silence” him. “It’s sick to see it come to this,” stated ZachXBT, “But I knew that one day this would happen, because the price of telling the truth is that sometimes people don’t like what you say.”
ZachXBT has previously disclosed data on many different crypto scams and exploits. On June 10, he identified activity associated with $1 million in cryptocurrency drained via Twitter phishing scams. On June 4, it revealed estimates that $35 million had been lost to an Atomic Wallet app exploit.
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