Bitwise Faces Multi-Million Dollar Lawsuit as Mukamal Family Sues Them for $2M in Damages

UTC by Temitope Olatunji · 3 min read
Bitwise Faces Multi-Million Dollar Lawsuit as Mukamal Family Sues Them for $2M in Damages
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Theodore Mukamal, a son of the Mukama family, stated that Bitwise executed a reckless pump-and-dump scheme for their selfish interest.

Bitwise Asset Management is facing a threat to its reputation after being accused of fraud by the Mukamal family, which was one of the early investors in the asset management firm.

The lawsuit, which was filed July 8 at the New York Supreme Court, alleges that the company and its top bosses, the CEO Hunter Horsley, President Teddy Fusaro, and the Chief Investment Officer Matt Hougan, engaged in negligence, a pump and dump scheme, deceiving investors which has defrauded many and caused them to lose a lot of money.

Theodore Mukamal, a son of the Mukama family, stated that Bitwise executed a reckless pump-and-dump scheme for their selfish interest. This caused the Bitwise 10 Crypto Index Fund (BITW) to trade below its Net Asset Value (NAV) for three years, which is a big blow to people who have invested.

In the complaint submitted, it was revealed that Mukamal had initially invested $1.3 million into Bitwise HOLD 10 Private Index Fund in March 2018. However, the agreement was altered in 2020 when Bitwise decided to turn the fund into a public OTC product, which was against the decision of some of the company’s investors.

The asset management also raised the management fee at that period. According to the plaintiff, the changes were forced on them during the COVID-19 market drop, leaving them with few choices.

“It should be noted that at the time that Plaintiffs were given this choice, based upon the then-unfolding COVID pandemic and resulting shutdown, the cryptocurrency market was trading down significantly… Given the current state of the market – a historic crash caused by a historic pandemic – Plaintiffs’ “choice” between converting or selling out at a fire sale price was not a real choice at all; Plaintiffs had no real choice but to consent to the conversion.”

The lawsuit further revealed that after the 2018 investment, which turned out to be profitable after liquidation, the Mukamals reinvested $4.85 million based on the assurance of the Bitwise executive, which turned out to be allegedly misleading.

Later, in 2024, the family sold their shares in Bitwise and lost $1.9 million because of what Bitwise did. The lawsuit further alleged that the company broke signed agreements, changed how it invests money without seeking consent and engaged in other risky and selfish practices.

Thus, due to the loss of funds incurred by the said pump and dump scheme, the  Mukamal family is seeking damages, legal fees, and other related expenses from Bitwise, which is $2 million.

Bitwise’s Response: Allegations Lack Merit

However, a Bitwise spokesperson has debunked the accusation, claiming that Theodore Mukamal read the document before signing, which shows he understood the agreement and was ready to accept the risk that comes with investing in it.

The spokesperson further said that Theodore has a record of threatening and suing other people, former jobs, and companies to pursue personal gain for himself, stating that the allegations have no merit.

Cryptocurrency News, News
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