Market Maker Sues Lawyer Over $4 Million BTC Transaction Gone Awry

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Market making and over-the-counter trading firm GSR Markets is taking legal action against lawyer Diana McDonald, who is accused of pocketing $2 million from a $4 million BTC transaction in which she acted as an escrow.

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GSR Markets Sues Lawyer Over Missing $2 Million

Hong Kong-based GSR Markets is taking legal action against a lawyer who was to act as an escrow in a $4 million BTC escrow transaction gone awry. According to the plaintiffs, GSR sent BTC to them in exchange for $4 million that was sent to the trust account of a lawyer designated to act as an escrow, only to have $2 million returned to them and receive no cryptocurrency.

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GSR asserts: “Valkyrie [one of the defendants] promised that it would provide Bitcoin to GSR Markets ]in exchange for $4 million. In reliance on that promise, GSR Markets wired $4 million” to the defendant.

GSR claims to have been acting as a broker for Alivia Corporation in seeking to carry out the transactions, alleging that on January 3, 2019, the “Plaintiff wired $4,000,000 into the account, expecting that it would immediately receive 1,000 [BTC] from the sellers. Based on that expectation, GSR Markets shorted those 1,000 [BTC], based on a purchase price of $3,635 per [BTC].”

Lawyer Claims No Wrongdoing

In addition to claiming that it failed to receive any BTC and is currently owed $2 million, GSR asserts that it lost approximately $380,000 in the process of unwinding its short position.

The plaintiff is asking for injunctive relief, and accuses McDonald and McDonald Law of breaching fiduciary duty and fraud. GSR is also suing Wells Fargo, the bank providing the account into which the funds were deposited, for “aiding and abetting fraud.”

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McDonald has responded to the accusation, claiming that she has not acted improperly and that her fiduciary duty ran only to the seller and not the buyer in the transaction. McDonald asserted that a portion of the funds was used to “unlock” a BTC wallet and that the plaintiff “confirmed delivery of 2,000 ‘non-spendable’ [BTC].”

What is your response to the suit between GSR Markets and McDonald? Share your thoughts in the comments section below!


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