Bitget and crypto influencer embroiled in legal saga after Reel Star token listing fiasco

0 0

Evan Luthra says Bitget froze his account in April. The exchange claims it was done on suspicions of market manipulation related to the sale of REELT tokens.

Join us on social networks

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 Reel Star project serves as a backdrop to these events. The influencer was hired as an adviser to Reel Star, a startup developing a social media app for creators. As compensation, Luthra was offered Reel Token (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. Regarding the decision, a spokesperson from Bitget told Cointelegraph:

“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 Reel Star co-founder 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.

“Bitget prevented me, a fully KYCed [Know Your Customer] 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.

In 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. 

In a blog post, Bitget issued a response to the event and said it was in communication with Luthra shortly 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: Bitget

On 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.

Several prominent figures from the crypto community jumped in to have their say on the matter, including Changpeng Zhao, the CEO of Binance. 

Magazine: Deposit risk: What do crypto exchanges really do with your money?


Leave A Reply

Your email address will not be published.