Original | Odaily Planet Daily ( @OdailyChina )
Author｜Nan Zhi ( @Assassin_Malvo )
Last week, a lawsuit filed by FTX showed that a Mauritian citizen named Nawaaz Mohammad Meerun (hereinafter referred to as Meerun) squeezed $1.2 billion from the FTX exchange and Alameda Research in a year without leaving any conclusive evidence.
First Look: Mysterious Whale Stole $450 Million
Meeruns first battle took place in January 2021. He chose a token with extremely low liquidity, BTMX, as his first prey. Over a two-month period, he continued to buy BTMX through the BitMax and FTX platforms, eventually controlling about 50% of the supply of the entire network . Driven by Meerun, the price of BTMX soared from $0.03 to $3, an increase of 10,000%.
Meerun then took advantage of a loophole in FTX’s margin trading system and borrowed hundreds of millions of dollars using inflated BTMX as collateral . He then quickly withdrew the funds, transferring $450 million to multiple wallet addresses .
“Meerun clearly knew that once his manipulation ceased, the price of BTMX would collapse and he would be required to return all of his ‘borrowed’ assets,” the lawsuit states. “But Meerun never intended to comply with FTX’s rules.”
Although BitMax warned the FTX team about the unusual transactions, FTX management did not take action. The FTX team locked his account but forgot to stop his withdrawal function . After Meerun cashed out and left, some employees even tried to transfer the loss to Alameda Research to cover up the matter.
Alameda becomes Meerun ATM
After successfully manipulating BTMX, Meerun did not stop there. Instead, he turned to a different strategy - short selling. He targeted another unpopular token, Mobile Coin (MOB).
Meerun first established a short position of about 10% of the total supply of MOB on FTX, and then Alameda was forced to take on these positions. To cover the short position, Alameda bought a large number of the token.
MOBs price surged 750% during Alamedas weeks of buying spree, from $8 to $68, with Alameda paying a significant premium, and then quickly plummeted after Alameda slowed down its buying. Ultimately, the transaction cost Alameda about $1 billion, and Meerun once again successfully cashed out.
In August 2021, Meerun allegedly used new accounts and aliases to carry out a similar manipulation scheme again with less liquid tokens such as BAO, TOMO, and SXP, making a profit of nearly $200 million before FTX became aware of it.
KNC Incident: Last Attempt, Failed (Did It?)
After multiple successes, Meerun once again targeted KNC tokens. He carefully set up a complex account structure, using stolen or forged KYC materials, fake addresses, and non-existent zip codes to open FTX accounts. He also set up 64 sub-accounts under the main account to circumvent FTXs collateral restrictions.
Then, he bought a large amount of KNC, another low-liquidity token, and pushed up the price through multiple accounts at the same time, eventually controlling about 70% of the KNC circulation in the market , thereby artificially creating price increases and increasing the nominal value of the collateral. Then, with the help of the aggregation calculation loophole of the FTX margin system, he dispersed the KNC holdings in multiple sub-accounts and borrowed funds with the artificially inflated KNC as collateral, trying to withdraw as much funds as possible before the price collapsed. However, this time, a junior employee of FTX discovered the correlation of the fund flow and identified the connection with the previous operation. FTX promptly took account freezing measures and implemented new margin trading restrictions.
FTX then gradually became aware of Meerun’s model, but despite this, he successfully withdrew $68 million .
Criminal network and the mystery behind it
FTX’s lawsuit not only accuses Meerun of market manipulation, but also links him to a multinational organized crime group. The allegations include:
There are links to criminal networks in Poland, Romania and Ukraine involved in human trafficking and money laundering.
Linked to Islamic extremist groups and may have been involved in terrorism financing .
Meerun has always denied these allegations. He claimed that his transactions on FTX were in full compliance with the rules, and even emphasized that he suffered losses in the transactions. He said: I have nothing to do with any organized crime network and have never funded extremism or terrorist activities.
Interestingly, according to @LouisOrigny , Meerun filed a $12 million claim with FTX’s bankruptcy creditors in 2024.
I can only say that it is killing two birds with one stone, and I have learned the lesson...
