Your Guide to the Bitwise Lawsuit Scandal 🕵️
Bitwise Asset Management is currently embroiled in a lawsuit filed by Vandelay Industries on behalf of the Mukamal family. The lawsuit accuses Bitwise and its top executives of engaging in fraudulent activities, negligence, and executing a “pump and dump” scheme that led to significant financial losses for investors. The Mukamal family is seeking $2 million in damages as a result of these alleged actions.
Allegations Against Bitwise Executives
Back in early 2018, the Mukamal family invested approximately $1.3 million in the Bitwise HOLD 10 Private Index Fund. As time went on, tensions rose when Bitwise proposed transitioning the fund from a private placement to a publicly traded entity on OTC markets. Simultaneously, management fees saw a steep 25% increase.
According to the plaintiffs, these changes were thrust upon them during the COVID-19 market downturn, limiting their choices significantly. The lawsuit also sheds light on investments totaling $4.85 million in 2021 under new terms that Bitwise executives allegedly misrepresented.
The Mukamal family accuses Bitwise’s top executives – CEO Hunter Horsley, President Teddy Fusaro, and CIO Matt Hougan – of participating in a ‘pump and dump’ scheme that deceived investors and led to over $2 million in damages.
The Pump-And-Dump Accusation
Theodore Mukamal, a member of the Mukamal family, stated that a reckless and negligent pump-and-dump scheme was carried out to their detriment. This scheme resulted in their flagship product, the Bitwise 10 Crypto Index Fund (BITW), trading 35-65% below NAV for the past three years, causing substantial losses for thousands of investors.
By November 2020, Bitwise had initiated a campaign to sell off shares, urging investors to sell at a premium to NAV, ultimately resulting in losses.
Furthermore, the lawsuit accuses Bitwise of engaging in reckless and self-serving management practices, which included breaching signed agreements and altering investment structures without obtaining investor consent. The lawsuit also cites multiple violations of the SEC Act of 1934 and other regulatory breaches.
Serious Accusations Against Bitwise
The lawsuit levels serious allegations against Bitwise on several fronts, including Breach of Fiduciary Duty, Negligence, Negligent Misrepresentation, Fraud, Conspiracy to commit Fraud, and Violation of Section 10(b) of the Securities Exchange Act of 1934. These accusations cast doubt on Bitwise’s integrity, tarnishing the company’s reputation. It is worth noting that Bitwise enjoys support from notable investors such as Daniel Loeb and Stanley Druckenmiller.
A spokesperson for Bitwise has countered these claims by stating that Theodore Mukamal has a history of threats and lawsuits against individuals, former employers, and companies in pursuit of personal gain. The spokesperson asserts that Mukamal’s claims are baseless, and Bitwise intends to vehemently dispute them.
Closing Thoughts 🌟
As the Bitwise lawsuit continues to unfold, it serves as a stark reminder of the risks associated with investing in the cryptocurrency space. It underscores the importance of conducting thorough due diligence before committing funds to any investment opportunity. Stay informed, stay vigilant, and tread carefully in the ever-evolving world of digital assets.
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