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Compound DAO governance exploiter Humpy the Whale was among the targets of lawsuits brought by FTX’s estate last week.
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In 2021 and 2022 he allegedly bought massive amounts of illiquid tokens, pumping the price, and then used them to take out loans on the crypto exchange that were not repaid. He denies the charges.
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His actions, which exploited a flaw in FTX’s margin trading rules, led to $1 billion of losses for the exchange and Alameda Research, according to the lawsuit.
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Among the lawsuits filed last week by the FTX estate is a 32-page document listing eight counts against Humpy the Whale, the crypto trader who earlier this year attracted attention for a governance attack on Compound DAO.
Naming him as Nawaaz Mohammad Meerun, a Mauritian citizen, the suit filed in the U.S. Bankruptcy Court for the District of Delaware alleges that between January 2021 and September 2022, Meerun “orchestrated a series of massive market manipulation schemes and defrauded hundreds of millions of dollars from FTX.” It also claims Meerun had connections to organized crime groups. Meerun dismissed the allegations.
“Debtors also have identified extensive ties to Polish, Romanian, and Ukrainian organized crime networks, including groups linked to human trafficking, as well as to Islamic extremist networks linked to terrorist financing,” the filing says.
“All told, FTX and Alameda suffered approximately $1 billion in losses due to Meerun’s crimes, and Meerun has used the proceeds of his exploits to fund a wide range of other criminal activity.”
Massive amounts of tokens
According to the filing, in January 2021, Meerun began accumulating a position in BTMX, an illiquid token, eventually holding around half the supply, and helping drive up the price by over 10,000% in three months. He then allegedly exploited a flaw in FTX’s margin trading rules by using his stake as collateral to borrow tens of millions of dollars from the crypto exchange.
“Meerun knew that as soon as his manipulation stopped, BTMX’s price would crash and he would be required to return all of his ‘borrowed’ assets. But Meerun had no intention of complying with FTX’s rules,” the suit states.
Following failures on FTX’s side, Meerun made off with over $450 million from BTMX, according to the filing. FTX personnel tried to cover it up using the “now-familiar course of action” of shifting the losses to sister company Alameda Research.
At the same time,
