FTX, the derivatives exchange that launched its cryptocurrency desk earlier this year, has been hit with a $150 million lawsuit from an entity known only as Bitcoin Manipulation Abatement LLC. The group claims that FTX engaged in racketeering, market manipulation, negligence, and fraud, as well as an astonishing allegation that FTX launched an “attack” on Binance’s newly launched futures market in September.
— Samuel McCulloch (@traders_insight) November 3, 2019
Samuel McCulloch, host of the End of the Chain podcast, revealed the lawsuit on Sunday, which targets FTX itself; Alameda Research LLC, the quantitative trading firm behind the exchange; and a number of individuals associated with those companies. McCulloch uploaded several screenshots of the complaint, starting with the Binance attack, which states that the defendants were “caught red handed” making “two illicit unsuccessful attempts to manipulate prices of bitcoin futures listed on Binance cryptocurrency futures exchange.” This, they explain, was attempted by dumping over $2.6 million worth of BTC onto the new futures market with the intention to “cause an artificial price move that would trigger cascading execution of stop loss orders and liquidations of bitcoin futures long positions on Binance and propagate to other exchanges.” They were apparently caught by Binance’s “market surveillance functionality” and were thwarted.
Only scanned through the parts that explicitly had the word Binance. Honestly, all seems very far fetched. We have resolved the issues long ago.
— CZ Binance (@cz_binance) November 3, 2019
Response from those affected was swift. Alameda Research put out a blog post on Sunday night which called the claim a “bullshit lawsuit” that was “riddled with laughable inaccuracies”, even going as far as to call the complainant a “troll” with “no evidence of any wrongdoing”. They also claim the lawsuit is nothing more than an extortion attempt, adding that the claims are based on “shitposted conspiracy theories on Twitter”. Binance CEO ChangPeng Zhao also weighed in on the suit, stating on Twitter than it “all seems very far fetched”, adding that “we have resolved the issues long ago”. The case will be heard in the United States District Court for the Northern District of California, with preliminary hearing dates yet to be set.