In a stunning turn of events, the heirs of now-bankrupt crypto exchange FTX have filed a bombshell lawsuit against notorious crypto trader “Humpy the Whale,” alleging he orchestrated a series of massive market manipulation schemes that ultimately cost the company a staggering $1 billion in losses.
The 32-page complaint, submitted to the U.S. Bankruptcy Court for the District of Delaware, identifies the trader as Nawaaz Mohammad Meerun, a Mauritian national, and lays out eight charges detailing how he allegedly defrauded FTX out of hundreds of millions between January 2021 and September 2022.
The Alleged Schemes
According to court documents, Meerun’s modus operandi involved accumulating significant positions in illiquid tokens, driving up prices, and then exploiting a loophole in FTX’s margin trading rules to borrow against these inflated assets.
In one instance, Meerun allegedly cornered the market for BTMX token, amassing half the supply and causing a 10,000% price surge in just three months. He then used his holdings as collateral to borrow tens of millions from FTX, with no intention of repaying.
“Meerun knew that as soon as his manipulation ended, the price of BTMX would crash and he would be required to return all of his ‘borrowed’ assets. But Meerun had no intention of following FTX’s rules,” the lawsuit states.
The complaint alleges Meerun ultimately absconded with over $450 million from the BTMX scheme alone, while FTX staff attempted to cover it up by transferring losses to sister company Alameda Research. He then repeated similar manipulations with MOB, BAO, TOMO, and SXP tokens, making off with nearly $200 million more.
Ties to Organized Crime
Perhaps most shockingly, the lawsuit claims Meerun has “extensive ties to Polish, Romanian and Ukrainian organized crime networks, including groups connected to Human trafficking, as well as Islamic extremist networks tied to terrorism financing.” Though details are sparse, the plaintiffs assert Meerun used proceeds from his alleged crypto crimes to fund a wide range of other criminal activities.
The Compound Connection
Meerun first gained notoriety earlier this year for his so-called “governance attack” on lending platform Compound Finance. Operating under the alias “Humpy the Whale,” he amassed a large stake in Compound’s COMP governance token in an attempt to force through a proposal that would have siphoned over $20 million from the protocol’s users.
Though ultimately unsuccessful, Meerun leveraged his voting power to strike a “peace treaty” with Compound, securing additional payouts in exchange for not further exploiting the system. Critics decried the incident as an attack on decentralized governance.
Picking Up the Pieces
For FTX, still reeling from its catastrophic collapse and founder Sam Bankman-Fried’s arrest, the Meerun lawsuit represents yet another attempt to claw back some of the billions in customer funds that vanished from its coffers. But even if successful, the road to recovery remains long and uncertain.
As the crypto industry grapples with the fallout of FTX’s implosion and a crisis of confidence, the allegations against Humpy the Whale serve as a stark reminder of the risks posed by whales in these often murky, unregulated markets. With fortunes made and lost overnight and accusations of foul play around every corner, investors may be left wondering who, if anyone, they can trust.
The case is still in its early stages, and Meerun has yet to respond publicly to the charges. But one thing is clear: in the high-stakes game of crypto trading, even the biggest players are not immune to suspicion—or the long arm of the law.
