James Cirrone

Jeffrey Huang dropped his defamation lawsuit against the pseudonymous crypto investigator ZachXBT over a fiery June 2022 <a href="https://medium.com/@investigationsbyzachxbt/22-000-eth-embezzled-and-over-ten-projects-failed-the-story-of-machi-big-brother-jeff-huang-a1ad073fcfa8">article</a> that accused Huang of embezzling 22,000 ether from Formosa Financial.



The news came via equally-timed tweets late Monday morning from ZachXBT and Huang, also known as Machi Big Brother.&nbsp;



“Zach has many times in the past been of great service to the crypto community and pursuing legal action against him was a last resort but not the right path,” Huang <a href="https://twitter.com/machibigbrother/status/1691116322611159040">wrote</a> on Twitter at 11:55 am ET on Monday.



Huang continued, “I appreciate that Zach has made important amendments to his article, and we have mutually agreed to move on from this matter.”



To start, <a href="https://blockworks.co/tag/zachxbt">ZachXBT</a> altered his claim that Huang stole the 22,000 ether (<a href="https://blockworks.co/price/eth">ETH</a>) from Formosa, a startup Huang co-founded. The general information in the piece remained the same, but the verbiage changed substantially.&nbsp;



Formosa raised 44,000 ETH in a 2018 private token sale. On Aug. 12, 2019, 22,000 ETH was siphoned from the company’s initial coin offering (ICO) private sale wallet. Neither of these facts are disputed.



In the original <a href="https://web.archive.org/web/20220617034157/https://medium.com/@investigationsbyzachxbt/22-000-eth-embezzled-and-over-ten-projects-failed-the-story-of-machi-big-brother-jeff-huang-a1ad073fcfa8">piece</a>, ZachXBT claimed that Huang and George Hsieh, a Taiwanese politician that worked on Formosa, embezzled the 22,000 ETH in question. The two then left co-founder Ryan Terribilini in charge of the company with its remaining assets, according to ZachXBT.



ZachXBT’s original story also claimed that the reason multiple venture capital firms and angel investors declined to pursue legal action against Huang and Hsieh was because they “were seen as powerful figures in Taiwan” and “were afraid of what might happen if they came forward.”



In the updated piece that comports with Huang’s wishes, ZachXBT keeps most of this narrative intact, however, he does not use the words “embezzled,” or “stolen” when discussing what happened to the 22,000 ETH.



The biggest change came with the headlines. The original header was “22,000 ETH Embezzled and Over Ten Projects Failed: The Story of Machi Big Brother (Jeff Huang).”



Now, it’s been rewritten to a much shorter and less punchy: “A Story of Machi Big Brother (Jeff Huang),” though the original title can still be seen via Google search results.



Huang’s Cream Finance, a fork of <a href="https://blockworks.co/tag/Compound">Compound</a>, was also a topic covered in ZachXBT’s investigation.&nbsp;



Cream, founded in 2020, <a href="https://blockworks.co/news/flash-loan-exploit-whips-cream-finance-for-130-million">was exploited multiple times</a> for around $186 million. In the original piece, ZachXBT made no mention of the fact that over $100 million had been returned to the victims of the hacks. He has since added that detail to his report.



Additionally, the lawsuit, when it was still active, claimed that Huang wasn’t involved with Cream at the time of the exploits.&nbsp;



Thus, ZachXBT agreed to add in a note from Huang which read: “Cream was left in the hands of a highly-respected team in 2020, prior to the two exploits on August and October 2021. I returned to steward the protocol in Feb 2022 and recovered funds for those impacted by the exploits.”



ZachXBT had raised over $1 million dollars for his legal defense in June 2023, just three days after he appealed to crypto Twitter for help. Now, he’s pledging to return all unused funds.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/2 Today <a href="https://twitter.com/machibigbrother?ref_src=twsrc%5Etfw">@machibigbrother</a> has agreed to voluntarily withdraw the lawsuit. I have updated my article with additional context from Machi + edits from myself While I am disappointed it went down the legal route in the first place I am appreciative we are able to find a resolution&mdash; ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1691116363891552256?ref_src=twsrc%5Etfw">August 14, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Blockworks reached out to ZachXBT for more information on the size of his legal defense fund and how exactly he plans to return the money. He did not respond to a request for comment by publication time.



Update Sep. 4, 2023 at 10:15 am ET: ZachXBT <a href="https://twitter.com/zachxbt/status/1691206577393414144?s=20">detailed plans</a> on funds return in thread on X, formerly Twitter.



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ZachXBT, Machi Big Brother defamation suit has been dropped

Macauley Peterson

Pseudonymous crypto sleuth extraordinaire, ZachXBT, recently became the target of a defamation lawsuit in US District Court in Texas. To mount a defense, he appealed to crypto Twitter for help raising the necessary funds for attorneys, which he estimated to exceed $1 million.



Less than three days and over 18,000 Ethereum transactions later, ZachXBT has raised $1.1 million, with more coming in all the time.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">4/ Donation wallet address ETH: 0x6eA158145907a1fAc74016087611913A96d96624 (All EVM Chains are accepted and stablecoins are preferred)&mdash; ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1669783723037069313?ref_src=twsrc%5Etfw">June 16, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Just over a year ago, ZachXBT published <a href="https://medium.com/@investigationsbyzachxbt/22-000-eth-embezzled-and-over-ten-projects-failed-the-story-of-machi-big-brother-jeff-huang-a1ad073fcfa8" target="_blank" rel="noreferrer noopener">an account</a> of his detailed on-chain forensic investigation into Jeffrey Huang, also known as Machi Big Brother, a Taiwanese-American former musician and tech entrepreneur who was involved in various controversial crypto projects.



Among the allegations was that Huang embezzled 22,000 ether (about $10 million at the time) from Formosa Financial, a startup he co-founded which conducted a private token sale in 2018.



ZachXBT <a href="https://www.breadcrumbs.app/reports/1163" target="_blank" rel="noreferrer noopener">tracked transfers</a> of ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) from the Formosa treasury to various Binance accounts and wallets, raising questions about their ownership and connections to Huang associates.



Huang, the plaintiff in the defamation suit, seeks a retraction and “monetary damages in an amount to be determined at trial.” The complaint states Huang was falsely accused and that claims over his “supposed criminal conduct are categorically false.”



Huang went on to co-found Cream Finance, a fork of <a href="https://blockworks.co/tag/Compound">Compound</a>, which was subsequently <a href="https://blockworks.co/news/flash-loan-exploit-whips-cream-finance-for-130-million" target="_blank" rel="noreferrer noopener">exploited multiple times</a> for around $186 million in total, and eight other projects through Jan. 2022, some of which failed in days or weeks. “In so many of Jeff’s projects we see the same [recurring] themes play out: anon teams, forked projects, fresh wallets funded via FTX, and short lifecycles,” ZachXBT wrote.



The lawsuit claims Huang “was not involved with Cream Finance at the time of the hacks,” and more than half of the stolen funds were subsequently recovered.



It suggests that “the ulterior purpose” of the @ZachXBT Twitter account is “to attract financial contributions for [ZachXBT] in the form of purported ‘donations,’ as well as other compensation from websites that publish his work.”



Moreover, Huang’s lawyers claim a “more likely and obvious explanation” for the Formosa treasury’s ether trail is “that company insiders, rather than an outside advisor like [Huang], coordinated to orchestrate the transfers.”



The complaint implies that Lorne Lantz, the Formosa&#8217;s chief technology officer, was more likely to be responsible for the transfers and that ZachXBT’s investigation helped Lantz “escape scrutiny for losing Formosa Financial funds under his control,” motivated by <a href="https://twitter.com/zachxbt/status/1545843873389449218" target="_blank" rel="noreferrer noopener">his own investment</a> in Lantz’s subsequent project Breadcrumbs — an on-chain analysis tool ZachXBT uses in his work.



Blockworks reached <a href="https://twitter.com/stephendpalley/status/1669796600456028167?s=20" target="_blank" rel="noreferrer noopener">ZachXBT’s attorney</a>, Stephen Palley, for comment, who said “such an argument would be absurd and that Zach&#8217;s record speaks for itself.”



“This lawsuit has exposed him to considerable personal peril, including blackmail threats,” Palley told Blockworks.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Threats already coming in. Today some random account attempted to extort me for $100k. <a href="https://t.co/qQ7I30rn0P">pic.twitter.com/qQ7I30rn0P</a>&mdash; ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1670828486641033216?ref_src=twsrc%5Etfw">June 19, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h2 class="wp-block-heading">Crypto community support for ZachXBT</h2>



Many prominent crypto Twitter personalities have rallied around Zach’s cause, including Binance founder <a href="https://twitter.com/cz_binance/status/1670127173510856704?s=20">Changpeng “CZ” Zhao</a> and artist Beeple.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">.<a href="https://twitter.com/zachxbt?ref_src=twsrc%5Etfw">@zachxbt</a> FTW 💪 <a href="https://t.co/PdDao1S85W">pic.twitter.com/PdDao1S85W</a>&mdash; beeple (@beeple) <a href="https://twitter.com/beeple/status/1670151599887376384?ref_src=twsrc%5Etfw">June 17, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Many of the incoming donations are small, some — just a few cents — so small that it is likely the senders are speculating about a potential reward, rather than a genuine interest in ZachXBT’s defense.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1874" height="684" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=1024&amp;h=1024" alt="" class="wp-image-59330" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=1874 1874w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/2023-06-19-ZachXBT-transactions.jpg?w=80 80w" sizes="auto, (max-width: 1874px) 100vw, 1874px" /><figcaption class="wp-element-caption">Multiple donations in the same minute of the same amount from different addresses on BNB Chain; Source: <a href="https://app.zerion.io/0x6ea158145907a1fac74016087611913a96d96624/history?page=21">Zerion</a></figcaption></figure>



ZachXBT <a href="https://twitter.com/zachxbt/status/1610054262251294722?s=20">previously offered</a> an NFT as a thank-you to his supporters, which may be encouraging a <a href="https://en.wikipedia.org/wiki/Sybil_attack" target="_blank" rel="noreferrer noopener">Sybil attack</a> on a prospective snapshot of donor addresses now.



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Crypto sleuth ZachXBT raises $1.1 million and counting for legal defense

Sebastian Sinclair

<div id="highlights-block_6347c03eab5ae" class="highlights">
 <ul>
 <li>The individuals charged with the theft are said to be aged between 19 and 23</li>
 <li>Police investigations began in earnest after witnessing an internet sleuth attempting to track the stolen tokens</li>
 </ul>
 
</div>



French authorities have charged five young individuals for allegedly using a phishing website to scam victims out of millions of dollars worth of their NFTs, including those belonging to the Bored Ape Yacht Club collection.



The five are said to have belonged to a criminal gang that stole the tokens, worth an estimated $2.5 million, between late last year and early this year, <a href="https://www.bfmtv.com/crypto/nft/bored-ape-cinq-personnes-mises-en-examen-a-paris-pour-le-vol-d-une-collection-de-nft_AD-202210120607.html" target="_blank" rel="noreferrer noopener">local media</a> reported. 



The alleged scheme saw the individuals use a website to con victims into handing over their tokens under false pretenses. The site promised to transform their tokens from static images into animated ones.



Among the five indicted, two are suspected of having masterminded the website including marketing. The other three are suspected of having conducted advertising for the site as well as money laundering.



Police said they opened an investigation in late August after being made aware of an <a href="https://zachxbt.mirror.xyz/8k0TmMxxieSiwUfUlqFFKGDVoOx2SnneYti31hoHwUk" target="_blank" rel="noreferrer noopener">analysis</a> conducted by self-styled crypto-sleuth ZachXBT, who’d <a href="https://twitter.com/zachxbt/status/1556791003469647872" target="_blank" rel="noreferrer noopener">posted his findings</a> to Twitter. Two of the individuals are said to have been identified using Zach’s detective work.



Around that time, Zach had identified at least three victims who’d been subjected to the scam. Police have identified five victims, including one individual who’d had three NFTs stolen, with one of the Bored Apes estimated to be worth over a million dollars.



“Over the past year, we’ve seen scammers become more creative with new methods to phish people in Web3,” Zach said at the time.



As a result of its own investigation, the Central Office for the Fight against Crime Related to Information and Communication Technologies — the country’s cybercrimes unit — placed seven people in police custody on Monday.



That included the five individuals charged, aged between 19-24, as well as the parents of one suspect — though the parents have since been released without prosecution at this stage, according to the report.



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