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Accused of defrauding an international cryptocurrency trading firm of $2 million, Suwanee lawyer Diana McDonald told the State Bar of Georgia in February that the money remained safe in her firm's trust account “at all times.”

“There is no evidence to support a claim of misuse of funds or misconduct in this case,” McDonald wrote in response to a bar complaint filed against her by Hong Kong cryptocurrency trader GSR Markets Inc.

McDonald was the closing attorney designated by a Florida bitcoin broker for what should have been a $4 million purchase, according to court papers. GSR was the intended buyer.

The sale never took place. And, although McDonald eventually returned half of the $4 million GSR wired to one of her law firm's five trust accounts on Jan. 3, $2 million is still missing, according to a civil suit in federal court in Atlanta.

McDonald assured the bar that, although the bitcoin transaction was “in dispute,” the disagreement “does not arise from the funds in question having been misused.”

“This was a business dispute between parties, the seller was my client, and … I was advised that the bitcoins were sent,” she said. “My client seller informed me that he would lose the payment for the coins if I refunded the money.”

McDonald also accused GSR of making “disparaging claims” about her, issuing “personal threats,” engaging in “intimidation tactics” and launching a campaign “to smear” an Australian firm she represents. McDonald said in court papers and in testimony at a March hearing that Australian client Alivic was supposed to supply the bitcoins GSR intended to buy, even though Alivic's name appears nowhere in the purchase contract.

GSR's purchase contract was with the Valkyrie Group, a Florida bitcoin broker.

“I have not engaged in professional conduct that was dishonest, fraudulent, deceitful or involved misrepresentation,” McDonald told the bar. “I behaved legally and ethically above board.”

The bar complaint against McDonald—who has a solo practice in a town of less than 20,000 about 23 miles northeast of Atlanta—was filed by New York attorney Aaron Krowne, GSR's U.S. counsel.

“We were certainly critical of her activities and make no apology for it,” said Richard Robbins, GSR's lead counsel in the fraud case. But he added that any suggestion McDonald was intimidated “was dispelled when we confirmed … that she had been a litigator about 30 years and was probably used to aggressive arguments among attorneys.”

“We did, in fact, say what she did was wrong, and we were going to go to law enforcement authorities and the state bar. If she considers that disparaging, so be it,” Robbins said.

McDonald is currently listed by the bar as “an active member in good standing.”

In recently filed court papers, GSR accused McDonald of fraud, theft, perjury and engaging in a racketeering scheme with the Valkyrie Group and Valkyrie executives in Florida and New York. GSR is seeking $18 million in compensatory and punitive damages from McDonald, the Valkyrie Group and Wells Fargo, where McDonald housed multiple law firm trust and personal accounts. GSR claims the bank “aided and abetted” in the alleged fraud.

Wells Fargo has denied the allegations.

GSR attorneys also have asked Judge Mike Brown of the U.S. District Court for the Northern District of Georgia to hold McDonald in contempt, jail her and fine her daily until GSR is repaid. GSR claims the penalties are warranted because McDonald flouted Brown's court order barring her from spending, using or disbursing any GSR funds—including any money she transferred from GSR's $4 million deposit.

According to court records, McDonald had five law firm trust accounts and four operating accounts at three separate banks.

McDonald acknowledged she began disbursing more than $400,000 in what she claims were legal fees within hours of GSR's wire transfer. McDonald testified in a court hearing last month that she did not interpret Brown's order to bar her from spending the legal fees.

In response to the contempt motion, McDonald said any violation “was inadvertent” and based on an oral ruling by Brown that would allow McDonald to continue to operate her law firm “with the relatively small amounts held in the firm operating accounts.”

McDonald has filed her own motion to disqualify Brown, claiming he may have “a personal bias against me and my law firm” that “may affect his ability to fairly preside.” Brown denied the motion.

Her former counsel, James Ward Howard, suggested that McDonald “is as much a victim as anyone else” in what he acknowledged appears to be “a fraudulent scheme.” Howard withdrew as McDonald's counsel on April 11 after she paid him $90,000 from funds she siphoned from GSR's $4 million. Brown ordered the lawyer to return $60,000 to GSR, according to court records and Howard.

Robbins confirmed Friday that he has reported the missing money and McDonald to the FBI and the U.S. attorney in Atlanta.

Spokesmen for U.S. Attorney Byung J. “BJay” Pak and the FBI declined to comment. McDonald, who is representing herself, has not responded to multiple calls and emails.

Neither the Valkyrie Group nor principals Hugh Austin and Brandon Austin have responded to GSR's civil suit, and no attorney has entered an appearance on their behalf. They could not be reached for comment.

McDonald's own testimony in a March 15 deposition raises questions about her assurances to the bar that GSR's missing money was secure in her firm trust account. McDonald testified that she had not spent or disbursed any of GSR's escrowed funds.

She also suggested that she, too, “might have been duped.”

The bar's rules of professional ethics prohibit attorneys from commingling client funds and a lawyer's personal or law firm operating funds in trust accounts.

A bar spokeswoman declined to comment on the pending complaint against McDonald, citing bar confidentiality rules.

But McDonald's bank statements—which were introduced at her deposition and included in the court record—showed that the same day she received GSR's wire transfer, she began transferring hundreds of thousands of dollars to other accounts in her name and writing tens of thousands of dollars in checks. When GSR wired the money, McDonald's firm trust account had a $94.14 balance, according to a bank statement included in the court record.

In her deposition, McDonald confirmed the transfers but claimed she had little or no documentation to support them.

McDonald also acknowledged that she transferred more than $400,000 to herself, her law firm or other affiliates. She also acknowledged sending checks totaling more than $500,000 to individuals and companies to belatedly reimburse them for money they sent to McDonald to finance bitcoin purchases and other deals that never came to fruition.

McDonald also acknowledged writing thousands of dollars in checks to her staff, to her husband, to a company her husband set up, to a bankruptcy trustee overseeing her husband's bankruptcy, to her 36-year-old son, to charity, to other family members and to several friends.

GSR alleges that within 48 hours of receiving its $4 million wire, McDonald and her law firm made 31 online transfers or wires of GSR Markets' money—including transfers to multiple law firm trust accounts and personal accounts which had insignificant balances and reflected virtually no other banking activity. According to GSR, 25 transfers were over $1,000, 11 were over $25,000, and six were over $100,000.

McDonald also claimed in court pleadings that, once GSR wired the money, she immediately forwarded $2 million to Alivic. Multiple bank statements, including one for the trust account where GSR wired the $4 million, show no $2 million payment to anyone.

“I kept Alivic, the client, apprised of my interactions and work on the company's behalf, [and McDonald's law] firm complied with the instructions received from Alivic,” she said. “There was no agreement that prohibited the [McDonald law] firm from releasing funds to Alivic so that they could do what was necessary to initiate transfer of the bitcoin to the buyer's wallet.”