Crypto Sleuth ZachXBT Avoids Lawsuit After Backing Off Claims Against NFT Trader

The crypto industry’s best-known blockchain sleuth, the pseudonymous ZachXBT, said on Monday that the defamation lawsuit brought against him by Jeffrey “Machi Big Brother” Huang in June has been dropped.

As part of an agreement with Huang, ZachXBT made significant alterations to his published investigation, in the process removing some of the sharper accusations against the entrepreneur and NFT trader while softening the language of some of his claims.

“While I am disappointed it went down the legal route in the first place,” ZachXBT said on Twitter, “I am appreciative we are able to find a resolution.”

ZachXBT added he would soon return leftover funds that were donated by supporters to bankroll his legal defense.

Huang, a Taiwanese-American musician and tech entrepreneur, filed the lawsuit against ZachXBT in the U.S. District Court for the Western District of Texas over the sleuth’s accusations of embezzlement.

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In an investigatory deep dive published in June 2022, ZachXBT accused Huang of pilfering 22,000 ETH—worth around $40.7 million worth, as of this writing—from a defunct crypto project Huang had co-founded called Formosa Financial.

In the lawsuit’s complaint, Huang’s counsel accused ZachXBT of “publishing and maliciously promoting” false statements that they said wrongly painted Huang as a criminal, seeking damages for the harm caused to his reputation.

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Huang acknowledged the lawsuit was withdrawn on Monday, specifying it was a mutual decision reached only after ZachXBT made “important amendments” to his original article.

“Pursuing legal action against him was a last resort but not the right path,” Huang said on Twitter. “I am withdrawing my defamation suit.”

Decrypt reached out to ZachXBT and Huang’s legal team, but did not immediately hear back from either side.

Allegations of embezzlement were removed from ZachXBT’s investigatory piece, according to an archived version of the original article. ZachXBT’s claim that Huang has “gone on to launch over 10 failed pump and dump tokens and NFT projects” since his involvement in Formosa was also removed.

Other alterations to ZachXBT’s article, of which there are many, dampen language that describes Huang’s past associations or erase assertions altogether. 

For example, a snippet that described Huang’s project Mithril in 2017 as “sketchy” and with “shadowy team members, questionable ethics, and rote pump and dump practices,” was instead pared back to say “vivid team members and wild price fluctuations.”

In another section, ZachXBT removed a sentence that said he reached out to an unnamed source to inquire about the delayed IPO listing of a firm named 17 Media that Huang created.

Elsewhere, ZachXBT swapped out “caught” for “accused” when it came to Huang and Mithril trying to influence a so-called Community Coin vote on Binance.

When ZachXBT divulged the lawsuit against him in June, he said that it was “baseless” and “an attempt to chill free speech.” Broadly revered as someone who stands up for the common good in an industry that’s too often opaque, supporters rushed to fund ZachXBT’s legal fees.

High-profile names like Tron founder Justin Sun and Binance CEO Changpeng Zhao helped ZachXBT reach over a million dollars in donations in just a couple of days. On Monday, ZachXBT said he would soon clarify the “process of returning any unused funds from the legal defense.”