GM,
This Thursday is the Dragon Boat Festival holiday, so there will be no issue from Blocktrend. Let's get to the main topic.
In Taiwan's crypto community, "Machi Big Brother ", Jeffery Huang, is certainly not a stranger. He ventured into the crypto world around 2017 and has launched no less than 10 crypto projects. In 2021, he was fortunate enough to become an early player in the Bored Ape Yacht Club (BAYC) NFT, purchasing a large number at a low price and distributing them to his celebrities friends.
In the eyes of the mainstream media, Jeffery Huang's transition from a celebrity to a crypto entrepreneur represents a successful crossover. However, in the crypto community, he is sarcastically referred to as the "Big Cutter", implying he is "harvesting leeks" (a colloquial term for profiting off inexperienced investors). Most investors are angry but dare not speak up. But in 2022, a user named ZachXBT directly named Jeffery Huang in a post, alleging that Huang misappropriated 22,000 ETH from the "Formosa Financial" project in 2018, revealing a complex interest group behind him.
This has made Jeffery Huang quite angry. He not only doxxed ZachXBT's real name but also filed a defamation lawsuit against him in a U.S. court last week. However, ZachXBT has built considerable credibility in the crypto community, and many people have donated money in support. Currently, ZachXBT's public donation wallet has received over a million dollars in aid. Even if he loses the lawsuit, he need not worry.
This article discusses who ZachXBT is, what was written in the report, and why Jeffery Huang has decided to sue.
On-chain Sleuth
To understand who ZachXBT is, we can start with a piece created by Beeple in 2022. The character in the background that looks like a penguin is ZachXBT's Twitter profile picture, and the fleeing mouse in the foreground alludes to those who take advantage of various pretenses to "harvest leeks" in the crypto community. This piece is called "No Place to Hide".
Many media outlets became familiar with ZachXBT because he often shares on-chain data analysis investigations on Twitter. But I noticed him because he often appears on the donation lists of Gitcoin and RetroPGF. According to ZachXBT's self-introduction on Gitcoin:
Over the past year I have built up a pseudonymous identity on Twitter shedding a light on all the wrong doing that goes on in the Crypto/NFT space. The topics I've researched range from insider trading, rug pulls, undisclosed promotions, & other unethical behavior.
After falling victim to similar things as a newcomer during the last crypto bull-run cycle I began to experience deja vu as I noticed it all start to occur once again. I eventually became fed up and decided to research and document the shady things that go on to hopefully educate as many people as possible and increase transparency in the space.
What began as just one Tweet quickly evolved into something much larger. My work has been featured in places such as Bloomberg, Vice, NYT, & many more. Most of my time is spent researching leads using on-chain tools (Breadcrumbs, various blockchain explorers, & Nansen) as well as other tools (Twitter search, Archive.org, YouTube, etc).
All funding received will go to equipment upgrades, future legal costs, and to whatever you value my time working about 8+ hours daily, researching & answering as many people as humanly possible. All of my work thus far has gone unpaid besides a donation address I set up at the end of January.
ZachXBT's work is akin to a private detective like Sherlock Holmes. However, rather than starting an investigation based on a client's commission, he independently investigates and then publicly presents the findings, ultimately allowing the community to freely donate, determining whether his efforts are worthwhile. Currently, ZachXBT's Twitter account has 416,000 followers and has received about 400 ETH in donations.
In 2022, French police arrested 5 suspects involved in internet phishing based on a report compiled by ZachXBT. Not only can ZachXBT assist the police in solving cases, but he also exposes many leek-harvesting projects that operate in gray areas, such as KOLs who encourage people to invest in trash coins, or DeFi and NFT projects that seem brilliant on the outside but are full of pitfalls.
Blocking someone's financial path can be dangerous. Therefore, he always maintains anonymity online and relies on cryptocurrency donations to sustain his operations. In June 2022, ZachXBT published an article titled "22,000 ETH Embezzled and Over Ten Projects Failed: The Story of Machi Big Brother (Jeff Huang)", unveiling the unknown secrets behind the crypto projects associated with Jeffery Huang over the past few years.
Evidence Abounds
According to ZachXBT's investigative report:
In 2017, Jeffery Huang founded Mithril (MITH) and took his first steps into the world of cryptocurrencies. Mithril is a decentralized social media platform that rewards content creators directly with its native token, Mithril Coin (MITH). This was the first of a series of projects by Huang, the team members of which were mysterious and morally questionable, and demonstrated typical signs of hype and dump behavior.
In July 2018, Huang and the Mithril team were found to have cheated in Binance's community coin listing vote. The voting procedure was 1 BNB equals 1 vote, and each account could cast up to 500 votes, with the coin receiving the most votes winning. A user named Lucky found evidence that the Mithril team received over 80,000 votes, all of which were funded by 2 to 3 addresses. This suggested possible cheating.
Taiwanese crypto investors are certainly no strangers to Mithril. Back in 2018, when cryptocurrencies were not widespread and people were curious about mining, Mithril made a name for itself by combining social media, which people used every day, with the enticing concept of "mining" through what it called social mining.
Mithril seized the opportunity to issue Mithril Coin (MITH) and rewarded users with tokens for interacting on its own social media platform. At the time, Huang even guided some 17 LIVE hosts to participate in social mining.
Just as people were immersed in researching social mining and exploring the underlying token economy, Mithril announced that it would be listed on the world's largest cryptocurrency exchange, Binance. This was great news, as it implied that the coin's price was ready to soar.
However, the reason why Mithril was able to gain the support of a large number of BNB holders may be a result of a self-directed performance. ZachXBT's report pointed out that Binance users who voted for Mithril Coin were all nominee accounts, and even the BNB votes were obtained by Huang through the diversion of 22,000 ETH from another ICO project, Formosa Financial:
In early 2018, Huang co-founded Formosa Financial with Taiwanese politician Xie Guoliang, an asset management platform. Formosa Financial raised 22,000 ETH in angel funding in April and an additional 22,000 ETH in private funding in May. However, just three weeks after completing the fundraising, two transactions of 11,000 ETH each were withdrawn from Formosa Financial's wallet. One went to Huang, and the other to the current mayor of Keelung, Xie Guoliang.
At the end of June 2018, Xie Guoliang transferred 10,500 ETH to a Binance account, and Huang transferred 11,000 ETH to different Binance addresses in June and July. One Binance account address often received funds from the FTX exchange and littlebang.eth. Littlebang.eth, a senior engineer for CREAM Finance, also received a BAYC#7066 directly from Huang. It raises the question of why someone not part of the Formosa Financial team received 4,980 ETH just three weeks after the ICO and a BAYC from Huang years later.
It wasn't until 2022 that ZachXBT revisited the case in an attempt to reconstruct the events. Four years on, the blockchain clues have only increased.
For instance, after receiving 11,000 ETH from Formosa Financial in 2018, Huang transferred them to several Binance account addresses. But it wasn't known at the time who these accounts belonged to. But with the subsequent on-chain data, it's possible to trace which wallets (with ENS domain names) these addresses often interacted with, and then infer who Huang actually transferred the ETH to. Plus, the popularity of Bored Apes in 2021 further confirmed to ZachXBT that littlebang.eth and Huang had a close relationship, and Huang wouldn't randomly give away a Bored Ape.
Moreover, back in 2018, people probably couldn't explain why Huang would distribute 11,000 ETH to a number of Binance accounts instead of his personal account. But in retrospect from 2022, it becomes clear. At that time, Mithril was about to participate in Binance's coin listing vote, and these 11,000 ETH might have been exchanged for BNB and voted for Mithril through nominee accounts.
If you had known all this about Mithril Coin's listing on Binance, what would you have done? Even the most naive person would know to buy a large amount of Mithril Coin and sell it all after the listing. It would even be worth borrowing money to buy it. But conversely, if you were an uninformed investor, your actions might be completely the opposite, mistakenly thinking that Mithril had a bright future and was a standout project from a fierce voting competition.
In the end, the more optimistic one was about Mithril, the worse one would lose. This is the scam that ZachXBT wanted to expose, and the reason why Huang can never shake off the title of "Big Cutter". While everyone knows he's wealthy, his way of making money is hardly commendable.
Actually, ZachXBT's investigative report was made public as early as June 2022, but it didn't receive much attention. At the time, Huang threatened to sue but took no action. Meanwhile, ZachXBT slowly built up people's trust in him over the year. Not only did people start donating to his zachxbt.eth wallet, but he also received over $50,000 in matching funds through Gitcoin. In the most recent RetroPGF airdrop, ZachXBT was the 5th highest vote-getter, receiving nearly 190,000 OP tokens in total.
Ironically, Jeffery Huang decided to sue ZachXBT when he was at the peak of his fame.
A Reputation Loss
According to ZachXBT:
Unfortunately, I must announce here that I was sued by Jeffery Huang for an article I published in June 2022. Today, Jeffery Huang has filed a defamation lawsuit. This lawsuit is unreasonable and is merely an attempt to suppress freedom of speech. I intend to fight back and defend free speech. It's a classic David vs Goliath story. To my knowledge, Jeffery Huang is very wealthy, but I am not. He's trying to silence me with money. So, I am seeking everyone's help to preserve the truth. The donation wallet address is zachxbtlegalfund.eth
I have created a donation address to help pay for the litigation costs of this case, which could easily exceed $1 million. All remaining funds will be proportionally returned to contributors. This situation is nauseating, but I knew that such a day would come because the cost of speaking the truth is sometimes people not liking what you say. I always try to maintain the objectivity of my research, letting data and historical records speak for themselves.
Many people may have long been dissatisfied with Jeffery Huang's style of action. His lawsuit against ZachXBT, the 'embodiment of justice', has become a fuse, evolving into a situation of a small shrimp fighting a big whale.
Driven by the community, people have donated in support. Within 24 hours, the donation amount reached $800,000, and it has exceeded $1 million at the time of my writing this article.
Even the CEOs of Binance, CZ, and Kraken, Jesse Powell, have publicly donated to support ZachXBT. I originally wondered why Jeffery Huang chose to sue at this time, and upon reading the complaint, I discovered that the key was Binance.
According to the complaint filed by the lawyer appointed by Jeffery Huang:
ZachXBT's false description of Jeffery Huang has been disseminated to millions of people. Coupled with the defendant's refusal to withdraw the false allegations, this has caused significant damage to the plaintiff's reputation and position in the cryptocurrency community. This has also had a major impact on Jeffery Huang's current business and caused him to lose other business opportunities.
These losses include a significant drop in the value of various cryptocurrency projects, including Binance's cancellation of its mandate for one of Jeffery Huang's projects, Cream Finance, which caused it to fall out of the top 21 in voting rights, terminate its validation node, and caused the project's value to be greatly lost. Moreover, ZachXBT's false description of Jeffery Huang also led to the delisting of the plaintiff's project, Mithril, by Binance, causing millions of dollars in losses. Therefore, the plaintiff intends to claim damages from the defendant through legal proceedings.
After reading this statement and looking back at CZ publicly donating $50,000 to ZachXBT, it becomes clear what happened. I guess with Jeffery Huang's wealth, these monetary losses are probably negligible. Jeffery Huang originally wanted to vent his anger through litigation and teach ZachXBT, the small shrimp, a lesson, but he misjudged the situation and ended up getting himself flamed.
Perhaps those who have already donated to ZachXBT didn't read the investigation report in detail or are not familiar with Mithril and Formosa Financial projects. The donors are not concerned about where the 22,000 ETH went, nor how Jeffery Huang manipulated the voting in the past, but they want to express an attitude through donations —— a small shrimp can also defeat a big whale.
This is the belief deeply rooted in the souls of crypto participants and is the main reason driving them to donate in succession. In the context of Bitcoin, the small shrimp is Satoshi Nakamoto, and the big whale is the government and financial system that Bitcoin wants to fight against. In this case, the final judgment of the court may not be that important. The stronger the community's support for ZachXBT, the more people abhor the act of cutting leeks. Even if Jeffery Huang wins the case, his image in people's minds has already been judged as losing.
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