Renowned pseudonymous crypto sleuth, ZachXBT, finds himself embroiled in a defamation lawsuit filed in the US District Court in Texas. In a bid to mount a robust defense, he turned to the crypto community on Twitter, appealing for financial assistance to cover the anticipated legal costs, which he estimated to surpass $1 million.

Remarkably, within just three days, ZachXBT’s call for support garnered over 18,000 Ethereum transactions, resulting in an impressive fundraising total of $1.1 million, with contributions continuing to pour in.

Over a year ago, ZachXBT gained attention for his meticulous on-chain forensic investigation into Jeffrey Huang, also known as Machi Big Brother. The Taiwanese-American former musician and tech entrepreneur was associated with several controversial crypto projects. Among the allegations made by ZachXBT was the embezzlement of 22,000 ether (equivalent to approximately $10 million at the time) from Formosa Financial, a startup co-founded by Huang, which conducted a private token sale in 2018.

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ZachXBT meticulously tracked the movement of ether (ETH) from the Formosa treasury to various Binance accounts and wallets, raising questions regarding their ownership and their links to Huang’s associates.

Huang, as the plaintiff in the defamation suit, seeks a retraction and “monetary damages in an amount to be determined at trial.” He adamantly denies the accusations, declaring the claims of his alleged criminal conduct as entirely false.

Following his involvement with Cream Finance, a Compound fork that suffered multiple exploits resulting in total losses of around $186 million, Huang co-founded eight additional projects until January 2022, some of which failed shortly after their launch. ZachXBT stated, “In so many of Jeff’s projects, we see the same recurring themes: anonymous teams, forked projects, fresh wallets funded via FTX, and short lifecycles.”

Huang’s lawsuit claims that he “was not involved with Cream Finance at the time of the hacks” and emphasizes that more than half of the stolen funds have since been recovered.

Furthermore, Huang’s lawyers argue that the @ZachXBT Twitter account has an ulterior motive “to attract financial contributions for [ZachXBT] in the form of purported ‘donations,’ as well as other compensation from websites that publish his work.”

The complaint posits a “more likely and obvious explanation” for the ether trail from the Formosa treasury, suggesting that “company insiders, rather than an outside advisor like [Huang], coordinated to orchestrate the transfers.” It implies that Lorne Lantz, Formosa’s chief technology officer, may have been responsible for the transfers, and ZachXBT’s investigation inadvertently shielded Lantz from scrutiny. This theory is based on Lantz’s subsequent project, Breadcrumbs, an on-chain analysis tool employed by ZachXBT in his investigative work, which also received investment from Lantz.

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ZachXBT’s attorney, Stephen Palley, dismissed these claims as absurd, highlighting ZachXBT’s exemplary track record. Palley also disclosed that the lawsuit has exposed ZachXBT to significant personal risk, including blackmail threats.

Prominent figures within the crypto Twitter-sphere, such as Binance founder Changpeng “CZ” Zhao and artist Beeple, have rallied behind ZachXBT’s cause, offering their support.

Although many donations received are small, even as low as a few cents, it is suspected that some senders are motivated by speculation rather than a genuine interest in supporting ZachXBT’s defense.

Multiple donations in the same minute of the same amount from different addresses on BNB Chain; Source: Zerion

As a token of gratitude to his supporters, ZachXBT had previously offered an NFT, a move that may have inadvertently led to a Sybil attack on the prospective snapshot of donor addresses.

Written by Agbo Obinnaya.

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