Bitget and crypto influencer embroiled in legal saga after ReelStar token listing fiasco
Update (Aug. 18 at 2:09 pm UTC): This article has been updated with both sides’ perspectives and additional information. Further commentaries are expected from both sides.
Crypto influencer Evan Luthra has brought a lawsuit against crypto exchange Bitget for freezing his account after a new token listing in March. According to Luthra, the exchange suspended his withdrawals and froze $200,000 in Tether (USDT) while attempts to seek clarification went unanswered.
Luthra’s involvement with the ReelStar project serves as a backdrop to these events. The influencer was hired as an adviser to ReelStar, a startup developing a social media app for creators. As compensation, Luthra was offered Reel Tokens (REELT), the project’s utility token. Upon its listing, the influencer sold 1.3 million REELT tokens on Bitget. Luthra’s account was then frozen under suspicion of market manipulation. A spokesperson from Bitget told Cointelegraph about the decision:
“Bitget faced a manipulative attack by a group of traders attempting to profit by manipulating trades on the exchange. Their target was a new coin called REELT, which they tried to dump immediately after its listing on Bitget, causing a large drop in the coin’s price.“Additionally, Bitget claims to have contacted the crypto influencer for an explanation: “In response, he admitted to selling the tokens. However, when we asked for the reasons behind this abnormal behavior, we did not receive active feedback or satisfactory response.“
Luthra claims innocence, citing ReelStar CEO Navdeep Sharma’s alleged approval of his token sale plans. The influencer now seeks a substantial $16 million in damages, along with the $200,000 held in his account. His lawsuit encompasses Bitget, Foresight Ventures and key executives.
Finally, I just served Bitget $16,000,000+ for the damages and money they stole from me.
They are boldly disregarding the laws and regulations & continuing their scam.
But, we won't stop.
If you have funds in Bitget, take them out before they go down.
Here's why: pic.twitter.com/EHOiYREoMN
— EvanLuthra.eth (@EvanLuthra) August 4, 2023“Bitget prevented me, a Fully KYCed user of their platform, from withdrawing my tokens,” Luthra stated to Cointelegraph, adding:
“After I sold this portion of my allocated tokens, my funds —including the crypto [...] I already had on the exchange before REELT — were blocked, and the company stole what my tokens were worth for themselves.“According to Gracy Chen, Bitget’s managing director, the exchange previously announced an investigation into the case, disclosing the findings weeks later along with a compensation plan for more than 500 clients using both the company’s own funds and funds from frozen transactions.
“At Bitget, user protection is our top priority. When we detect any illegal or fraudulent behaviors on our platform, we take immediate action,” she wrote in a post on Aug. 4, saying the exchange had not been notified of the lawsuit at that time.
Some recent news mentioning a potential lawsuit about us from one advisor of REELT project, contains both facts and FUDs. Regarding the "abnormal trading behavior" of the REELT token back in April, we have announced the investigation results and user compensation plan in our…
— Gracy Chen @Bitget (@GracyBitget) August 5, 2023In response to Chen, Luthra noted that he was just an “ordinary user who received the tokens as compensation for a consultation” and should not be considered part of the project team.
I am an ordinary user who received tokens as compensation for consultation, just as you received tokens for listing.
Holding me responsible for the price drop or considering me a part of the project is an unreasonable assumption. I am no more involved in the project than you…
— EvanLuthra.eth (@EvanLuthra) April 6, 2023In its blog post, Bitget issued a response to the event and outlined that it was in communication with Luthra soon after the event took place. The exchange explained the reasoning behind its actions: “After our investigation, we believe the account mentioned has been involved in suspicious trading behaviors on Bitget.“
Bitget blog post excerpt. Source: BitgetOn X (formerly Twitter), crypto community members expressed mixed reactions to the lawsuit. While some of Luthra’s supporters observed that the case exposes common issues faced by users of centralized crypto exchanges, others claimed otherwise, saying Bitget acted correctly by protecting its users.
Best support by cex exchange in the #Crypto ecosystem is always more important than their services.
Similar it doesn't matter that you have made best product but if you don't have enough good service center then it is worthless.
Without support the product and services is…
Several prominent figures from the crypto community jumped in to have their say on the matter, including Changpeng Zhao, the CEO of Binance.
You should talk to them, right? We are not a regulator for other exchanges.
— CZ Binance (@cz_binance) April 6, 2023Magazine: Deposit risk: What do crypto exchanges really do with your money?