Crypto asset management firm Bitwise is facing a $2 million lawsuit filed by Vandelay Industries on behalf of the Mukamal family. The lawsuit alleges financial misconduct, including breach of fiduciary duty, negligence, fraud, and violations of securities laws.
The dispute stems from the Mukamal family's $1.3 million investment in the Bitwise HOLD 10 Private Index Fund in early 2018. By 2020, Bitwise converted the fund into a publicly traded entity on OTC markets and increased management fees by 25%, allegedly forcing these changes on investors during the COVID-19 downturn.
The plaintiffs claim Bitwise misrepresented investments made in 2021, resulting in a nearly $1.93 million loss. They argue that Bitwise locked them into unfavorable terms, highlighting broader industry concerns about transparency and investor protection during market volatility.
Bitwise, valued at $500 million in 2021 and managing $3 billion in assets, is backed by prominent investors like Daniel Loeb and Stanley Druckenmiller. The firm denies the allegations, claiming the lawsuit is a baseless attempt by Theodore Mukamal to extort money. Bitwise asserts that Mukamal signed documents acknowledging the risks associated with the fund and previously threatened legal action unless paid a significant sum.
Despite the legal challenges, Bitwise continues its market activities, managing the Bitwise Bitcoin Fund (BITB) with recent inflows of $2.08 billion and net assets worth $2.18 billion. The firm also updated filings for a spot Ethereum ETF, demonstrating ongoing engagement in the crypto market.
The outcome of this lawsuit could have significant implications for the crypto asset management industry, potentially influencing regulatory standards and industry practices regarding investor protection and transparency. The case is being closely watched for its broader impact on the digital asset management landscape.
July 2024, Cryptoniteuae