IEOs Accuse BitMax Exchange of Running Illegal Pump and Dump Schemes
CEO @ Lunar Digital Assets, Hobbyist Writer, Cryptonaut. Cybersecurity. Algorithmic Bot Trading.
Seven months ago when I predicted that IEOs would soon overtake ICOs
as the primary fundraising method for blockchain projects
, I touted BitMax
as a potential contender to become the next Binance. The platform was innovative, the team was very competent, and everything seemed to be going in the right direction for the little known exchange. I had high hopes for BitMax -- I thought that maybe they could soon be a real contender to Binance.
I couldn't be more wrong.
BitMax is still considered by many investors as the "darling exchange" of the crypto industry... that is unless he or she has been liquidated in a illiquid market with margin trading. Flash crashes happen often, in fact I've witnessed several with my own eyes (the most shocking one being the GDAX Ethereum
flash crash to $0.10 in 2017). However, there are much deeper, darker crimes going on behind the scenes. What's even more mind-boggling is that the exchange didn't even make an attempt to hide these heinous acts.
Lies and Misleading Claims
FBG Capital is not a very liked entity in the cryptospace. A long time friend and avid ICO investor in 2017 and 2018 told me "I wouldn't touch a FBG project with a ten foot pole." When Shane Molidor from FBG became Head of Business Development at BitMax, many thought it was an odd choice, as George, the CEO of BitMax, is known to be a very smart man. During the negotiations between BitMax and my client, DeepCloud AI
, Shane was all talk. "We will help you with marketing," "we will help you with more exchange listings," "oh, you must constrain the supply as much as possible," "we have the best market makers in the world, you don't need a secondary MM -- I'm from FBG!" Every single broken promise and complete incompetency would soon be revealed to the detriment of DeepCloud AI.
The Proof is in the Data
When Max from DeepCloud AI, whom I've been working with for over a year had come to me exhausted and speechless, I was furious. I have never heard him sound so defeated, and I had to get to the bottom of this. In the BitMax <> DeepCloud chat room I couldn't help but to blow up and call him out.
The Data: using Microsoft's Power BI I quickly began to input the trade logs from the "market maker" that was provided by BitMax. Now let's take a step back -- a market maker's primary objective is to provide liquidity in newer markets. What was shocking was that BitMax's "market maker" got more and more aggressive in buying up tokens to pump the price, instead of facilitating a more stable growth which would allow price discovery for the token to come naturally.
What the data showed was the complete opposite. In fact, BitMax's "market makers" (and yes, I will continue to put quotes around "market makers" because they are clearly not), managed to burn through $1.275mil in liquidity funds in a matter of weeks. Every competent market maker I've spoken to nearly has a heart attack when they hear this. This puts a project in a detrimental position: when extremely aggressive buying is conducted to pump the price, eventually you are left with a whole bunch of tokens and zero funds to provide liquidity on the buy side. With no buy support, naturally the token's value plummets violently. And that's exactly what happened to DEEP, the token of DeepCloud AI. The 18 months of hard work that the DeepCloud team has put in, surviving the brutal bear market, finally raising funds only to have it wiped out by bad actors is just heart-breaking.
To make matters worse, a "colleague" of Shane (he hates him, just like everyone else that's dealt with him), who has been helping Lunar Digital Assets in unrelated projects, was un-phased by the news -- in fact, Shane had allegedly bragged about their pump and dump tactics from his FBG days. Shane defended their actions, even going as far as to say that they spent $300K on a token buyback program. No Shane, you nor BitMax spent $300K on no such thing; the $300K was DeepCloud AI's money. Get your facts straight, and get out of your 2017 fantasy.
The Rabbit Hole Goes Deeper
So far five IEOs have launched on BitMax: DOS Network, Ferrum Network, DUO Network, DeepCloud AI, and UltrAlpha (George's personal project). Let's take a look at the first four aforementioned.
Do you see a pattern forming? Every single IEO to launch on BitMax has fallen to the same fate.
...except, of course one. George's personal project, UltrAlpha.
Needless to say, many projects are very upset at BitMax; not only IEO projects. Projects duped into paying for their "market making" services as well. I myself am having a hard time figuring out if it's Shane Molidor's complete incompetency, or if BitMax is willingly participating in these pump and dump schemes designed to kill new projects. Several of the BitMax IEO victims are allegedly looking to join forces to consider legal options; don't be too surprised to see a visit from the SEC or the NYSDFS at BitMax's headquarters in NYC.
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