Mukamal Family Sues Bitwise $2M in Damages

Asset management platform Bitwise is currently dealing with a lawsuit after being accused of carrying out a pump-and-dump by the Mukamal Family.

Bitwise Asset Management is in danger of losing its reputation due to allegations of fraud by the Mukamal family, one of the initial investors in the asset management firm.

The lawsuit, which was filed on July 8 at the New York Supreme Court, claims that the company and its top executives, including CEO Hunter Horsley, President Teddy Fusaro, and Chief Investment Officer Matt Hougan, engaged in a pump and dump scheme that defrauded investors and caused them to lose a significant amount of money.

Bitwise’s reckless pump-and-dump scheme was implemented for their selfish gain, according to Theodore Mukamal, a son of the Mukama family. This resulted in the Bitwise 10 Crypto Index Fund (BITW) trading below its Net Asset Value (NAV) for three years, a significant setback for investors.

The complaint submitted disclosed that Mukamal had invested $1.3 million in the Bitwise HOLD 10 Private Index Fund in March 2018. Nevertheless, the agreement was modified in 2020 when Bitwise converted the fund into a public OTC product, which several of the company’s investors opposed.

Asset management also increased the management fee during that time. The plaintiff claims that the modifications were imposed upon them during the COVID-19 market decline, which left them with limited options.

“It should be noted that at the time that Plaintiffs were given this choice, based upon the then-unfolding COVID pandemic and resulting shutdown, the cryptocurrency market was trading down significantly… Given the current state of the market – a historic crash caused by a historic pandemic – Plaintiffs’ “choice” between converting or selling out at a fire sale price was not a real choice at all; Plaintiffs had no real choice but to consent to the conversion.”

The lawsuit also disclosed that the Mukamals reinvested $4.85 million under the Bitwise executive’s assurances, which were allegedly misleading, following the 2018 investment, which proved profitable following liquidation.

In 2024, the family liquidated their shares in Bitwise and suffered a loss of $1.9 million due to Bitwise’s actions. The lawsuit also claimed that the company violated signed agreements, altered its investment strategy without consent, and engaged in other self-serving and hazardous activities.

Consequently, the Mukamal family requests $2 million in damages, legal fees, and other related expenses from Bitwise due to the financial losses associated with the pump-and-dump scheme.

Bitwise’s Response: These allegations are without merit

Nevertheless, a spokesperson for Bitwise has refuted the allegation, asserting that Theodore Mukamal reviewed the document before signing it, indicating that he comprehended the agreement and was prepared to assume the associated risks.

The spokesperson also stated that Theodore has a history of menacing and suing other individuals, former employers, and companies to pursue personal gain for himself. They further noted that the allegations are without merit.