FTX Exposes Shocking Insider: A User Suspected of Manipulating the Market to Profit Hundreds of Millions of Dollars

Recently, with the deepening of the litigation related to the FTX bankruptcy case, some little-known insider details have gradually come to light. A lawsuit against Nawaaz Mohammad Meerun has attracted widespread attention from the crypto community. This Mauritian citizen is accused of using incredible means to manipulate the market by exploiting loopholes in the FTX platform, profiting up to hundreds of millions of dollars.

Manipulating the Market with Low Liquidity Tokens

According to the lawsuit documents from the Delaware bankruptcy court, Meerun is described as a "veteran" of market manipulation. He mainly focuses on illiquid tokens and is suspected of being involved in multiple money laundering and Ponzi schemes. Starting in January 2021, Meerun began to purchase a large amount of BTMX tokens, accumulating about half of the total supply, which caused the token's price to surge by 10,000% within three months.

Subsequently, Meerun exploited the leverage features and margin trading rule loopholes of FTX to borrow tens of millions of dollars using BTMX as collateral from the platform. Despite warnings from the exchange, FTX took no action. It is reported that Ryan Salame, the co-CEO of FTX Digital Markets at the time, had received alerts about suspicious activities but chose to ignore them.

From August to December 2021, Meerun also used new accounts and aliases to repeat similar operations with low liquidity tokens such as BAO, TOMO, and SXP. He had made nearly $200 million in profits this way before FTX became aware of the issue.

FTX's Oversight and Response

It is perplexing that even after the issue was discovered, FTX still did not completely stop Meerun's actions. Although his account was locked, they "forgot" to disable his withdrawal function, allowing Meerun to successfully transfer over $450 million in manipulated proceeds.

In order to cover up the huge loopholes existing on the platform, FTX adopted the strategy of "robbing Peter to pay Paul," transferring losses to its sister company Alameda Research.

Short Selling Strategies and the Losses of Alameda Research

Meerun's operations also included shorting a token called Mobile Coin (MOB) on the FTX platform. To cover these short positions, Alameda Research was forced to buy a large amount of MOB tokens from the market, causing its price to soar by 750%. This series of operations ultimately resulted in a loss of up to $1 billion for Alameda.

Meerun's Response and Other Accusations

In the face of these accusations, Meerun insists that his actions are within the scope of the exchange's regulations and denies any association with criminal networks. However, the lawsuit documents also mention that he was previously accused of participating in a "governance attack" on the lending platform Compound Finance, attempting to transfer assets from other protocol users.

Industry Warnings and Lessons Learned

This event has sounded the alarm for the cryptocurrency industry, highlighting several key issues:

1. The exchange needs to improve its KYC procedures and strictly implement anti-money laundering regulations.
2. Strengthen the supervision of internal personnel and establish a sound internal control mechanism.
3. Establish a comprehensive risk assessment system, with a particular focus on the trading of low liquidity assets.
4. Investors should be wary of unusual price fluctuations in low liquidity tokens.
5. Prioritize trading on regulated exchanges.

The details of this case undoubtedly provide a profound warning for the entire cryptocurrency industry and offer valuable lessons for future risk prevention.