Market
Bitwise Faces $2 Million Lawsuit: Investors Claim Misconduct
Bitwise Asset Management is facing a lawsuit from Vandelay Industries, which is representing the Mukamal family. The suit accuses Bitwise and its top executives of significant financial misconduct and seeks $2 million in damages.
The controversy began with the Mukamal family’s early 2018 investment of about $1.3 million in the Bitwise HOLD 10 Private Index Fund. This family includes a retired nurse and her two sons, Theodore Mukamal, a lawyer, and Andrew Mukamal, a fashion stylist.
Why Vandelay Industries Filed a Lawsuit Against Bitwise
By 2020, tensions escalated as Bitwise proposed shifting the fund from private placement to a publicly traded entity on over-the-counter (OTC) markets. Concurrently, management fees increased by 25%. According to the plaintiffs, these changes were forced upon them during the COVID-19 market downturn, significantly restricting their options.
“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,” a legal document seen by BeInCrypto mentioned.
Read more: Crypto Hedge Funds: What Are They and How Do They Work?
The lawsuit also highlights investments totaling $4.85 million in 2021 under new terms that Bitwise executives allegedly misrepresented. These actions purportedly locked the Mukamals into less favorable conditions. Consequently, based on net asset value calculations during early 2024, the Mukamal family had to bear a financial loss of nearly $1.93 million.
That being said, Vandelay Industries alleges Bitwise of the following:
- Breach of Fiduciary Duty
- Negligence
- Negligent Misrepresentation
- Fraud
- Conspiracy to Commit Fraud
- Violation of Section 10(b) of the Securities Exchange Act of 1934
This legal battle is spotlighting broader industry practices, especially how investment firms manage disclosures and transitions amid market volatility. Valued at $500 million in 2021 and managing about $3 billion in assets, Bitwise draws support from influential investors such as Daniel Loeb and Stanley Druckenmiller.
This backing adds significant public interest and complexity to the proceedings.
Moreover, the implications of Bitwise’s legal issues could extend far beyond the courtroom. The legal battle might set precedents for the management of crypto funds and the required level of investor communication transparency.
In an interview with BeInCrypto, a Bitwise spokesperson claimed that Theodore Mukamal has a history of threatening and suing other people, former employers, and companies to pursue personal gain.
“Theodore has repeatedly signed documents confirming that he understands and accepts the risks and details of the Bitwise digital asset funds he chose to invest in. Earlier this year, he reached out to Bitwise, threatening to sue and smear Bitwise’s reputation in the press unless he was paid a large sum of money. We believe his claims are utterly without merit, and we intend to dispute them vigorously,” a Bitwise spokesperson told BeInCrypto.
Bitwise is also the issuer of the spot Bitcoin exchange-traded fund (ETF), Bitwise Bitcoin Fund (BITB).
According to data from SoSoValue, BITB has attracted inflows of $2.08 billion as of July 5. The ETF has net assets worth $2.18 billion.
Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach
Last week, Bitwise updated its S-1 filings for the spot Ethereum ETF.
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Ethereum price started a fresh increase above the $2,720 resistance. ETH is up over 10% and now approaches the key barrier at $3,000.
- Ethereum started a fresh surge above the $2,720 resistance zone.
- The price is trading above $2,750 and the 100-hourly Simple Moving Average.
- There is a new connecting bullish trend line forming with support at $2,820 on the hourly chart of ETH/USD (data feed via Kraken).
- The pair could continue to rise if it clears the $2,950 resistance.
Ethereum Price Extends Its Increase
Ethereum price started a fresh increase above the $2,650 resistance like Bitcoin. ETH was able to climb above the $2,720 and $2,750 resistance levels to move further into a positive zone.
It even surged above the $2,850 level in the past few sessions, beating BTC. It is up over 10% and there was a move above $2,920. A high is formed at $2,955 and the price is showing signs of more upsides. It is well above the 23.6% Fib retracement level of the upward move from the $2,355 swing low to the $2,955 high.
Ethereum price is now trading above $2,800 and the 100-hourly Simple Moving Average. There is also a connecting bullish trend line forming with support at $2,820 on the hourly chart of ETH/USD.
On the upside, the price seems to be facing hurdles near the $2,920 level. The first major resistance is near the $2,950 level. The main resistance is now forming near $3,000. A clear move above the $3,000 resistance might send the price toward the $3,120 resistance.
An upside break above the $3,120 resistance might call for more gains in the coming sessions. In the stated case, Ether could rise toward the $3,250 resistance zone.
Are Dips Limited In ETH?
If Ethereum fails to clear the $2,950 resistance, it could start a downside correction. Initial support on the downside is near the $2,850 level. The first major support sits near the $2,820 zone and the trend line.
A clear move below the $2,820 support might push the price toward $2,720. Any more losses might send the price toward the $2,650 support level in the near term. The next key support sits at $2,550.
Technical Indicators
Hourly MACD – The MACD for ETH/USD is gaining momentum in the bullish zone.
Hourly RSI – The RSI for ETH/USD is now above the 50 zone.
Major Support Level – $2,820
Major Resistance Level – $2,950
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BNB price struggled to stay above the $600 zone. The price is consolidating gains and might aim for a fresh increase above the $605 level.
- BNB price started a downside correction from the $612 resistance zone.
- The price is now trading above $590 and the 100-hourly simple moving average.
- There is a connecting bullish trend line forming with support at $595 on the hourly chart of the BNB/USD pair (data source from Binance).
- The pair must stay above the $588 level to start another increase in the near term.
BNB Price Holds Support
After a close above the $585 level, BNB price extended its increase. However, upsides were limited above $610 and the price remained capped unlike Ethereum and Bitcoin.
There was a move below the $605 and $600 levels. The price even dipped below the 23.6% Fib retracement level of the upward move from the $543 swing low to the $611 high. However, the price is now holding gains above the $580 level.
The price is now trading above $595 and the 100-hourly simple moving average. There is also a connecting bullish trend line forming with support at $595 on the hourly chart of the BNB/USD pair.
If there is a fresh increase, the price could face resistance near the $605 level. The next resistance sits near the $612 level. A clear move above the $612 zone could send the price higher. In the stated case, BNB price could test $620. A close above the $620 resistance might set the pace for a larger move toward the $632 resistance. Any more gains might call for a test of the $650 level in the near term.
More Losses?
If BNB fails to clear the $605 resistance, it could start another decline. Initial support on the downside is near the $595 level and the trend line. The next major support is near the $578 level or the 50% Fib retracement level of the upward move from the $543 swing low to the $611 high.
The main support sits at $570. If there is a downside break below the $570 support, the price could drop toward the $560 support. Any more losses could initiate a larger decline toward the $550 level.
Technical Indicators
Hourly MACD – The MACD for BNB/USD is losing pace in the bullish zone.
Hourly RSI (Relative Strength Index) – The RSI for BNB/USD is currently below the 50 level.
Major Support Levels – $595 and $578.
Major Resistance Levels – $605 and $612.
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