Pseudonymous blockchain sleuth ZachXBT, who for years has conducted volunteer on-chain investigations into alleged financial misconduct in the cryptocurrency industry, has been sued for defamation by an entrepreneur he had previously scrutinized.
In June 2022, ZachXBT accused Taiwanese-American musician and tech executive Jeffrey Huang, known also by his online handle Machi Big Brother, of embezzling 22,000 ETH—worth roughly $37.8 million at writing—from a defunct crypto treasury management platform Huang had co-founded. The sleuth backed up the assertion with on-chain data.
On Thursday, Huang filed a federal lawsuit in the U.S. District Court for the Western District of Texas, alleging the accusations were false and that ZachXBT is now liable for damages to Huang’s reputation.
1/ It’s unfortunate I have to make this thread but I am being sued by MachiBigBrother for an article I published in June 2022.
Today Machi filed the defamation lawsuit. The lawsuit is baseless and an attempt to chill free speech. I intend to fight back & defend free speech. pic.twitter.com/anVY6zXU5a
— ZachXBT (@zachxbt) June 16, 2023
“I have consistently maintained that the allegations in his article are false,” Huang wrote on Twitter Friday. “I look forward to proving through the lawsuit that [he] unlawfully defamed me.”
Critically, to file the suit, Huang and his attorneys managed to ascertain ZachXBT’s legal name and place of residence. As ZachXBT has, for years now, publicly probed numerous powerful actors in the crypto space, his ability to remain anonymous has been key to his sustained presence as a leading voice in the Crypto Twitter community, and the crypto industry more broadly. The investigator’s legal name is now visible in copies of Thursday’s lawsuit uploaded to multiple public databases.
On Friday, ZachXBT took to Twitter to inform his 403,000 followers of the development.
“The lawsuit is baseless and an attempt to chill free speech,” he wrote. “It is sickening to see it come to this, but I knew one day this would happen as the price of telling the truth is sometimes people dislike what you say.”
ZachXBT also called on his supporters to donate funds to support his legal defense, as the analyst intends to fight the lawsuit in court—a decision he anticipates will likely incur costs that “could easily exceed $1 million USD.”
In the hours following the appeal, a wallet address dedicated to ZachXBT’s legal defense fund has already received about $320,000 worth of cryptocurrency from over 500 donors. While the majority of those donations have been made in Ethereum or USDC, a number of meme tokens including Jesus Coin, Pepe Coin, and Good Gensler Coin have also been sent to the wallet.
It appears that ZachXBT has already found legal representation for the suit: Brown Rudnick, a Boston-based law firm that in December was hired by the Bahamian government to advise on matters pertaining to the collapse of FTX, and previously successfully represented the actor Johnny Depp in his defamation suit against the actress Amber Heard.
“Along with Jess Meyers and the team at Brown Rudnick, I’m honored to represent ZachXBT in his ongoing mission to speak truth to power,” Brown Rudnick partner Stephen Palley wrote on Twitter this afternoon. Meyers was a member of Depp’s litigation team.
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