ZachXBT, Machi Big Brother defamation suit has been dropped
ZachXBT had raised a substantial sum to fight Jeffrey Huang in court — now he plans to give the unused money back
Vitalii Vodolazskyi/Shutterstock modified by Blockworks
Jeffrey Huang dropped his defamation lawsuit against the pseudonymous crypto investigator ZachXBT over a fiery June 2022 article 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.
“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 wrote 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, ZachXBT altered his claim that Huang stole the 22,000 ether (ETH) from Formosa, a startup Huang co-founded. The general information in the piece remained the same, but the verbiage changed substantially.
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 piece, 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 Compound, was also a topic covered in ZachXBT’s investigation.
Cream, founded in 2020, was exploited multiple times 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.
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.
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 detailed plans on funds return in thread on X, formerly Twitter.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: Unpacking crypto and the markets.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
