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Bitget and cryptocurrency influencer caught in legal dispute following ReelStar token listing incident.
Update (Aug. 18 at 2:09 pm UTC): This article has been revised to include perspectives from both parties and additional details. Further statements are anticipated from both sides.
Crypto influencer Evan Luthra has initiated legal action against the cryptocurrency exchange Bitget for freezing his account following a new token listing in March. Luthra asserts that the exchange halted his withdrawals and froze $200,000 in Tether (USDT) while his inquiries for clarification went unanswered.
Luthra’s connection to the ReelStar project provides context for these developments. He was engaged as an adviser to ReelStar, a startup focused on creating a social media application for creators. As part of his compensation, Luthra was granted Reel Tokens (REELT), the utility token for the project. After its listing, he sold 1.3 million REELT tokens on Bitget. Subsequently, his account was frozen due to suspicions of market manipulation. A Bitget spokesperson informed Cointelegraph about the rationale behind this decision:
“Bitget encountered a manipulative attack by a group of traders aiming to profit by manipulating trades on the exchange. Their target was a new coin named REELT, which they attempted to sell off immediately after its listing on Bitget, leading to a significant decline in the coin’s price.”
Furthermore, Bitget claims to have reached out to the crypto influencer for clarification: “In response, he acknowledged selling the tokens. However, when we inquired about the reasons for this unusual behavior, we did not receive timely feedback or a satisfactory response.”
Luthra maintains his innocence, citing the alleged approval of his token sale plans by ReelStar CEO Navdeep Sharma. He is now pursuing a considerable $16 million in damages, in addition to the $200,000 that remains in his account. His lawsuit includes Bitget, Foresight Ventures, and key executives.
“I have just served Bitget with a claim for over $16,000,000 for the damages and funds they have taken from me.
They are blatantly ignoring laws and regulations and continuing their fraudulent activities.
However, we will not relent.
If you have funds in Bitget, withdraw them before they face collapse.
Here’s why: pic.twitter.com/EHOiYREoMN— EvanLuthra.eth (@EvanLuthra) August 4, 2023
“Bitget has prevented me, a fully KYC-verified user of their platform, from withdrawing my tokens,” Luthra conveyed to Cointelegraph, adding:
“After I sold this portion of my allocated tokens, my funds — including the cryptocurrency […] I already had on the exchange prior to REELT — were blocked, and the company appropriated the value of my tokens for themselves.”
Gracy Chen, Bitget’s managing director, stated that the exchange had previously announced an investigation into the matter, revealing the findings weeks later along with a compensation plan for over 500 clients utilizing both the company’s own resources and funds from frozen transactions.
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“At Bitget, safeguarding our users is our highest priority. When we identify any illegal or fraudulent activities on our platform, we take immediate action,” she wrote in a post on Aug. 4, noting that the exchange had not been informed of the lawsuit at that time.
Some recent news mentioning a potential lawsuit against us from one advisor of the REELT project contains both facts and misinformation. Regarding the “abnormal trading behavior” of the REELT token back in April, we have disclosed the investigation results and user compensation plan in our…
— Gracy Chen @Bitget (@GracyBitget) August 5, 2023
In reply to Chen, Luthra emphasized that he was merely an “ordinary user who received the tokens as compensation for a consultation” and should not be regarded as 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 accountable 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, 2023
In its blog post, Bitget addressed the incident and clarified that it had been in communication with Luthra shortly after the event occurred. The exchange explained the rationale behind its actions: “Following our investigation, we believe the account in question has engaged in suspicious trading activities on Bitget.”
Bitget blog post excerpt. Source: Bitget
On X (formerly Twitter), members of the crypto community shared varied responses to the lawsuit. While some of Luthra’s supporters noted that the case highlights common challenges faced by users of centralized crypto exchanges, others contended that Bitget acted appropriately in protecting its users.
Best support by cex exchange in the #Crypto ecosystem is always more important than their services.
Similarly, it doesn’t matter if you have created the best product; if you lack a competent service center, it is worthless.
Without support, the product and services are…— AmanSai (@amansaiofficial) August 4, 2023
Several notable figures from the crypto community weighed in on the situation, including Changpeng Zhao, the CEO of Binance.
You should communicate with them, right? We are not a regulator for other exchanges.
— CZ Binance (@cz_binance) April 6, 2023
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