In a shocking turn of events, the now-bankrupt crypto exchange FTX has filed a lawsuit against notorious crypto trader Humpy the Whale, alleging a massive fraud scheme that cost FTX and its sister company Alameda Research approximately $1 billion in losses. The 32-page document, submitted to the U.S. Bankruptcy Court for the District of Delaware, not only accuses Humpy of market manipulation but also claims ties to organized crime and terrorist financing.
The Man Behind the Whale
Humpy the Whale, whose real name is allegedly Nawaaz Mohammad Meerun, a citizen of Mauritius, gained notoriety earlier this year for his governance attack on the Compound DAO. However, the FTX lawsuit paints a far more sinister picture, claiming that between January 2021 and September 2022, Meerun:
- Orchestrated massive market manipulation schemes
- Defrauded FTX of hundreds of millions of dollars
- Exploited loopholes in FTX’s margin trading rules
- Used profits to fund a wide range of other criminal activities
The lawsuit further alleges that Meerun has extensive ties to Polish, Romanian, and Ukrainian organized crime networks involved in human trafficking, as well as Islamic extremist networks linked to terrorism financing.
The Illiquid Token Scheme
According to the court filing, Meerun’s modus operandi involved accumulating large positions in illiquid tokens like BTMX, MOB, BAO, TOMO, and SXP. By holding significant portions of the token supply, he allegedly manipulated prices, using his holdings as collateral to borrow millions from FTX.
Meerun knew that as soon as his manipulation stopped, 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.
FTX Lawsuit
Exploiting flaws in FTX’s systems, Meerun allegedly absconded with over $450 million worth of BTMX alone. FTX personnel attempted to cover this up by transferring the losses to Alameda Research, which ended up losing an estimated $1 billion due to Meerun’s actions by August 2021.
The Compound DAO Governance Attack
The lawsuit also sheds light on Humpy the Whale’s notorious governance attack on the Compound DAO. By accumulating a significant stake in the COMP governance token, Meerun allegedly attempted to divert over $20 million in assets from other protocol users.
Using his leverage, he then forced a “peace treaty” with Compound, receiving additional payments in exchange for not further exploiting the protocol. This incident, which critics labeled a governance attack, raised concerns about vote manipulation, control centralization, and potential mismanagement of COMP’s $24 million treasury funds.
The Aftermath and Implications
The revelations in the FTX lawsuit against Humpy the Whale have sent shockwaves through the crypto community, raising questions about the prevalence of market manipulation, the security of decentralized finance protocols, and the potential for criminal elements to exploit the largely unregulated crypto space.
As the case unfolds, it is likely to have far-reaching implications for the future of crypto regulation and the ongoing efforts to prevent financial crimes and terrorist financing in the digital asset realm. The crypto industry will be closely watching this case, as it could set a precedent for how such matters are handled in the future.
For now, the crypto community awaits further details and developments in this shocking saga, as the full extent of Humpy the Whale’s alleged misdeeds and their impact on the industry comes to light.
