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According to a social media post on June 16, blockchain investigator ZachXBT was sued for defamation by one of the people he accused of fraud. According to the post, Jeffrey Huang, known as “MachiBigBrother” on Twitter, accused ZachXBT of damaging his reputation with false accusations.
MachiBigBrother also posted an announcement that he was suing the online sleuth.
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 restrict freedom of speech.” He promised to fight back.
In a thread responding to his own post, ZachXBT linked to a Medium post that is accused of defamation. In an article titled “22,000 ETH embezzlement and over ten failed projects: Big Brother Macha’s (Jeff Huang) story”, Huang is accused of launching “over 10 failed pump-and-dump and NFT projects”, including Formosa’s treasury management service financial.
One of the claims made in the article is that Formosa Financial co-founder George Shea removed 11,000 ether (ETH) from the project’s treasury:
“Formosa Financial got even worse when two withdrawals of 11,000 ETH each were made from Formosa Financial’s treasury wallet on June 22, 2018, executing themselves on both sides.”
The article claimed that Xie subsequently left the project, leaving other officers in charge. According to ZachXBT, the funds withdrawn from the treasury were sent to a variety of other wallet accounts shortly thereafter, including one that also received funds from the ENS domain harrisonhuang.eth.
Combined with other blockchain data, ZachXBT concluded that “these addresses are associated with Jeff Huang/Mithril.” ZachXBT blamed Jeff Huang for the outflow of funds, stating: “This chart shows the influx of ETH angel/private rounds into multisig before Jeff and George made two withdrawals of 11,000 ETH on June 22, 2018.”
Related: Project takes off with alleged $31.6 million scam
Cointelegraph received a complaint filed on June 15 on behalf of Jeffrey Huang in the US District Court for the Western District of Texas, Austin County. In it, Huang’s attorney argues that his client did not withdraw funds from the Formosa financial project, stating:
“Not only did Plaintiff not embezzle funds from the Formosa Financial project, he also never controlled any of the Formosa Financial funds, which makes embezzlement virtually impossible. Indeed, on the basis of information and belief, Respondent was well aware that, as a mere external consultant to the Formosa financial project, Claimant had no direct access to the allegedly stolen funds at all.”
In addition, Huang’s legal team stated that the founders of the project were most likely the ones who stole 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 external advisor such as Plaintiff, coordinated for organizing translations.
The lawsuit also alleges that ZachXBT earns money from donations as a result of his work as a network sleuth, which is allegedly the real reason for the article’s publication.
In a June 16 tweet, ZachXBT denied the allegations, saying that Huang was trying to “silence him.” “I hate to see it come to this,” ZachXBT said, “but I knew it would happen one day because the price of truth is sometimes people don’t like what you say.”
ZachXBT has previously disclosed data on many different cryptocurrency scams and exploits. On June 10, it discovered activity related to a $1 million cryptocurrency leak from Twitter phishing attacks. On June 4, it reported that $35 million was lost due to an Atomic Wallet app exploit dollars.