FTX estate has filed a lawsuit against Nawaaz Mohammad Meerun, well known by his pseudonym 'Humpy the Whale' in the crypto world. The lawsuit filed in the U.S Bankruptcy Court of the District of Delaware includes a 32-page lawsuit that indicates that Meerun engaged in eight counts of market manipulation and fraud from January 2021 to September 2022. The FTX estate claims that Meerun has stolen hundreds of millions of dollars through elaborate market manipulation schemes linked to several illiquid tokens.
Based on the filing, Meerun started his operations by acquiring a large amount of the BTMX token, which amounted to approximately 50% of the total circulating supply. He inflated the token's price by over 10,000% in `three months. He is claimed to have taken advantage of a weakness in FTX's margin trading policies: While possessing a massive amount of BTMX, he borrowed billions of dollars from the exchange. Even though he predicted that the market would inevitably crash once he ceased faking buying pressure, Meerun allegedly intended never to repay the borrowed cash and subsequently caused FTX a loss of over $450 million.
Furthermore, the estate's claim details Meerun's connections with various organized crime groups across Polish, Romanian, and Ukrainian networks, some of which were linked to severe offenses, including human trafficking and terrorist financing. This web of criminal association gives a horrible picture of how far Meerun allegedly went to finance his unlawful acts using cryptocurrency platforms.
The lawsuit also highlights the impacts of Meerun's actions on Alameda Research, an affiliated company to FTX. During the manipulation phase, Alameda took massive short positions on another token, the MOB, which put the company under tremendous financial stress. Attempts to occupy these positions led to increased costs; by August 2021, the company had incurred almost $1 billion in losses because of the aggressive approach to trading.
Besides financial market manipulation, Meerun also conducted a 'governance attack' on the Compound Finance platform. Under the pseudonym "Humpy the Whale," he accumulated considerable amounts of COMP tokens and voted on a proposal that could divert more than $20 million from other users. This scheme led to negotiations ending in a "peace treaty," illustrating Meerun's sway within the decentralized finance sector.