Bitwise Faces Multi-Million Dollar Lawsuit as Mukamal Family Sues Them for $2M in Damages

As a crypto investor who has lost a significant amount of money due to the alleged actions of Bitwise Asset Management, I cannot help but feel disappointed and frustrated. The accusations leveled against the company by the Mukamal family are quite alarming, and if true, it is a clear case of investor manipulation and deceit.

As a researcher examining recent developments at Bitwise Asset Management, I’ve come across allegations of potential fraud leveled against the company by the Mukamal family. The Mukamals were among the initial investors in Bitwise Asset Management, and their accusations have raised concerns about the firm’s reputation.

As an analyst, I would rephrase it as follows: I have analyzed a lawsuit filed on July 8 at the New York Supreme Court. This legal action accuses the company, along with its CEO Hunter Horsley, President Teddy Fusaro, and Chief Investment Officer Matt Hougan, of negligence and operating a pump-and-dump scheme. The allegations claim that they deceived investors through this fraudulent activity, resulting in significant financial losses for many individuals.

Theodore Mukamal, a member of the Mukama clan, accused Bitwise of engaging in a hazardous pump-and-dump scheme for their own gain. Consequently, the Bitwise 10 Crypto Index Fund (BITW) traded at a price lower than its actual Net Asset Value (NAV) for a three-year period, inflicting significant damage on investors.

In the filed complaint, it came to light that Mukamal originally put $1.3 million into Bitwise’s HOLD 10 Private Index Fund back in March 2018. Yet, the terms of the agreement shifted in 2020 when Bitwise opted to transform the fund into a publicly traded OTC product. This move contradicted the wishes of certain investors within the company.

During that time, the asset management company increased its management fees. As alleged by the plaintiff, these adjustments were imposed upon them amidst the market downturn caused by COVID-19, limiting their available options.

At the point when Plaintiffs were presented with this option, due to the worsening COVID-19 pandemic and subsequent market shutdown, the cryptocurrency market was experiencing a substantial decline. Considering the current state of the market – a historic crash brought about by an unprecedented pandemic – Plaintiffs’ supposed “choice” between converting or selling at rock-bottom prices was not a genuine choice; they had no real alternative but to agree to the conversion.

After making a successful investment of an undisclosed amount in cryptocurrencies through Bitwise in late 2018, I, as one of the Mukamals, was given confidence to reinvest a substantial sum of $4.85 million based on the executive’s reassurances. Regrettably, it has since been alleged that these guarantees were misleading.

In the year 2024, the family parted ways with their Bitwise shares, resulting in a significant loss of approximately $1.9 million. The legal complaint added that Bitwise had breached previously agreed terms, altered investment strategies without prior approval, and exhibited questionable behavior in other areas.

Due to the financial losses suffered by the Mukamal family as a result of Bitwise’s pump and dump scheme, they are pursuing a claim for compensation, attorney fees, and additional associated costs totaling $2 million.

Bitwise’s Response: Allegations Lack Merit

Yet, a representative from Bitwise has refuted the allegations, explaining that Theodore Mukamal reviewed the document prior to putting his signature on it. This action indicates that he was aware of the terms and conditions of the investment agreement, accepting the risks involved.

The representative added that Theodore has a history of making threats and filing lawsuits against individuals, past employers, and businesses to benefit personally, dismissing the accusations as baseless.

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2024-07-10 18:16