Would You Trust A Cryptocurrency Whose Operator Sues Journalists For Reporting On Lawsuits Calling You A Scam?

from the slapp-silly dept

In the fall of 2022 an apparent investor in a cryptocurrency called “Bitcoin Latinum” sued the guy behind the currency, Donald Basile. You can see the whole case here. There has been a bunch of back and forth on the docket, but it appears the remaining parties at some point went to binding arbitration.

Soon after the lawsuit was filed, Cyrus Farivar, one of the best tech reporters around, working for Forbes, wrote a pretty straightforward article about the lawsuit, entitled, “A Cryptocurrency Named After The Fictional Money In Star Trek Is ‘Worthless’ And ‘A Scam,’ New Lawsuit Alleges.”

The article gives a pretty standard summary of what the lawsuit claimed, and also presented the side of the “Latinum” folks including a quote from the company. Given that the word “Latinum” apparently comes from a currency in Star Trek, and one of the claims in that original lawsuit, by Arshad Assofi, was that Basile had said “Bitcoin Latinum was a project that received $20 million from the producers of Star Trek,” it was only natural for Farivar to ask Paramount about this and get this response:

“No one is familiar with this claim or with this ‘Bitcoin Latinum,’” emailed Jennifer Verti, a Paramount spokesperson. “This is not something that Star Trek is officially involved in at all.”

In the article, Farivar also quoted SEC boss Gary Gensler saying that the crypto world is “rife with fraud, scams, and abuse.” That quote is also straight from Assofi’s complaint. Farivar also made the very factual statement: “The world of cryptocurrency is awash with scammers and companies that don’t have actual products.”

For whatever reason, the corporate entity behind this Latinum thing, GIBF GP, Inc., waited a year and a quarter then last week decided to sue Farivar in the Delaware Court of Chancery, in a ridiculously silly SLAPP suit that only serves to drive that much more scrutiny on Bitcoin Latinum. And, really, it should make everyone question whether or not you’d trust a cryptocurrency that is suing a reporter who merely quoted the lawsuit against them.

In a separate move, it appears the same company has also sued Poker.org and its reporter Haley Hintze over an article she wrote almost exactly two years ago about a different lawsuit that was filed over Latinum. Except, bizarrely, the complaint against Hintze seems to claim that her article was about the Assofi lawsuit, when… it’s not. It’s about a different lawsuit. Also, the Hintze article appears to have been written nine months before Assofi filed his lawsuit.

I’m pretty confused by all this. The lawsuit admits that Hintze’s article was written in February of 2022, and then… that Assofi filed his lawsuit in November:

Time? How does it work. Also, again, the Hintze article doesn’t mention Assofi at all, because he hadn’t yet filed his lawsuit.

It appears that Latinum’s lawyer actually meant to sue over a different Poker.org article, that was published in November about the Assofi lawsuit, but repeatedly claims that the article was published on February 5, 2022, rather than the actual publication date of the article she meant, which was November 21, 2022. Also, Latinum’s lawyer included the February 5th article as the exhibit, rather than the November 21st article. Such attention to detail to talk about the wrong article and include the wrong article as an exhibit. Top notch lawyering.

And, like, the date matters. The statute of limitations for defamation in Delaware, where the cases were filed, is two years. Which means that the original Hintze article, published on February 5th 2022, was already passed the statute of limitations when Latinum sued, claiming to be suing over that article, on February 7th, 2024. Great lawyering work. Just amazing. (For what it’s worth the profile of the lawyer who filed both of these terrible cases claims her expertise is in “estate planning and probate,” which is…. not defamation.)

Speaking of defamation, according to the excellent folks at Chancery Daily, for the most part, libel and defamation are not within the Court of Chancery’s jurisdiction. There are a few very narrow exceptions, that do not appear to have been met here.

Back to Farivar’s case. It’s a clear SLAPP case. Again, Farivar was writing about a filed lawsuit, quoting what that lawsuit said, and making a general truthful statement about the prevalence of scams in the cryptocurrency world. The complaint also says that it’s defamatory because Farivar refers to Latinum as a “fictional” currency in the Star Trek universe. Which… it is?

Notably, Latinum sued Farivar individually, and not his publisher, Forbes, which is also common in many SLAPP lawsuits, where plaintiffs looking to silence reporters will sue the reporters individually rather than the publishers, perhaps hoping that the publisher won’t be able to cover the cost of fighting the lawsuit. It’s also weird because the remedies sought in the lawsuit include demanding that Farivar “remove” the article, which he might not even be able to do as an employee of Forbes.

There are a bunch of other potential problems with the lawsuit. It fails to even mention actual malice, let alone plead how Farivar published his article with actual malice. It tries to pretend that the Delaware jurisdiction is proper based on a very barebones claim that Farivar “regularly does or solicits business, engages in other persistent courses of conduct in the State….” That’s not how that works.

The complaint also admits that both Latinum’s founder, Basile, who is listed as a plaintiff, and Farivar are based in California, which is a good reason to point out that California (with is strong anti-SLAPP laws) are the proper venue for this suit. There’s also an oddity of stating that the allegedly defamatory comments resulted in “damages to their reputation and trade, in an amount well in excess of $75,000.00,” which is… the number you would need to claim damages for getting the case into federal court under diversity jurisdiction, but is irrelevant here in the Court of Chancery, which we already noted almost certainly does not have jurisdiction for a wide variety of reasons.

I’m sure Basile is unhappy with the Assofi lawsuit, and with it, the news coverage. But that’s how this works. If you get sued, people will write about the lawsuit. It’s not defamatory to do so, even if you don’t like how they covered it. But, also, if you then go and sue reporters for covering your lawsuit with sloppily written complaints, it’s only going to drive that much more scrutiny of whatever it is you’re trying to sell.

There’s always a point where you can stop digging, and if Basile wants to stop digging, it would be wise to dismiss both of these lawsuits, apologize to the reporters, and just focus on whatever thing he wants to build. If he disagrees with Assofi’s claims, he can just say that. He doesn’t need to sue reporters.

Anyway, this is yet another reminder that we need a federal anti-SLAPP law, along with strong anti-SLAPP laws in all 50 states.

Filed Under: anti-slapp, bitcoin latinum, california, cyrus farivar, defamation, delaware, delaware court of chancery, haley hintze, slapp

Companies: forbes, gibf gp, latinum, poker.org