Hong Kong-based algorithmic digital asset trading firm GSR Markets has filed legal charges before the Georgia Northern District Court against lawyer Diana McDonald over allegedly embezzling approximately $2 million of the $4 million in Bitcoin transaction in which she served as an escrow.
As the plaintiff detailed in the complaint filed March 4, GSR purportedly transferred $4 million to a lawyer’s trust account in exchange for Bitcoin. However, not only did the lawyer who acted as the escrow failed to deliver the digital currency but has also allegedly returned only half of the money wired by GSR.
As GSR explained, “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’s account.
According to the firm, GSR has been serving as a broker for Alivia Corporation in facilitating the transactions, claiming that on January 3, 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].”
On top of the aforementioned accusations, GSR asserted that it had also incurred over $380,000 in losses in the process of unwinding its short position.
GSR is currently seeking a court injunction, accusing McDonald and her law firm of fraud, in addition to infringement of fiduciary duty. Furthermore, the firm is also taking legal action against Wells Fargo, the California-based bank which purportedly provided the account in which the funds were wired, accusing the Financial services company of “aiding and abetting fraud.”
In response to the legal complaint, McDonald has issued a statement denying the accusations, asserting that her fiduciary duty in the transaction was only limited to the seller, not the buyer. As McDonald claimed, a fraction of the transferred amount was used to “unlock” a Bitcoin wallet, with the plaintiff confirming the “delivery of 2,000 ‘non-spendable’ [BTC].”