Bitquery Lawsuit Against Former CEO Over $5M Embezzlement and Record Deletion

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Cryptocurrency data analytics firm Bitquery has initiated legal action against its former CEO, Vasilios Karakitsos, over alleged $5 million fund diversion and financial record destruction.

Legal Action Initiated

Bitquery has filed a lawsuit in federal court, accusing Karakitsos of exploiting his administrative access to corporate banking systems to transfer $5 million in company funds to personal accounts and affiliated businesses. The complaint details a multi-year scheme beginning in 2022, following an $8 million investment from external stakeholders.

Timeline of Allegations

According to court documents, Karakitsos executed unauthorized wire transfers from Bitquery’s operational accounts to entities under his control. Forensic analysis revealed discrepancies between reported and actual cash reserves, with executives previously informed of $5 million to $6 million in available funds. Subsequent audits confirmed annual revenues of approximately $2 million in 2024 and 2025, with expenditures matching revenue levels, leaving minimal liquid assets.

Financial Discrepancies

The lawsuit highlights a significant gap between reported financial health and actual liquidity. While executives were informed of substantial cash reserves, audits later revealed that revenues in 2024 and 2025 were only $2 million, with expenditures aligning with this figure. This discrepancy suggests potential mismanagement or intentional concealment of financial data.

Alleged Unauthorized Activities

In October 2025, Karakitsos abruptly resigned, prompting a forensic investigation. Court records show he accessed Bitquery’s QuickBooks system and deleted 194 expense entries, bill receipts, and ledger items. Audit logs indicate these records documented direct transfers of funds to his personal accounts and associated ventures. The lawsuit further alleges he modified remaining financial records to obscure transaction trails and hinder internal audits.

Company Response and Legal Measures

Bitquery claims Karakitsos retains administrative access to core banking credentials, posing ongoing risks. The firm has appointed co-founder Aleksey Studnev as interim CEO to manage operations, secure digital infrastructure, and pursue legal remedies. The lawsuit seeks recovery of at least $5 million in misappropriated funds, along with compensatory and punitive damages. Bitquery is also requesting a judicial review of personal real estate, digital assets, and corporate property allegedly acquired using diverted capital.

“Asset recovery is critical to safeguarding investor interests and maintaining operational stability across its cryptocurrency analytics services,” the company stated in court documents.

Industry Implications and Expert Commentary

Karakitsos has denied the allegations, stating he will contest the claims through legal channels. The case highlights governance vulnerabilities in technology and crypto analytics firms, where centralized control over financial systems can create significant risks. Industry analysts note the dispute underscores the need for robust internal controls and transparent financial oversight in rapidly evolving digital asset sectors.