CoinDesk Misrepresents Bitfinex's Situation Again (Part One)

Bitfinex Dec 11, 2020

Unbelievably, it appears that CoinDesk has been caught in the act of misrepresenting material fact about Bitfinex once again.

This time, however, it felt more prudent to the latest episode of CoinDesk's non-existent journalistic standards in a formal 'article' that can be used for future reference.

Specifically, this piece will:

  1. Outline the implicit and explicit bias in the article being examined.
  2. Thoroughly breakdown why the alleged inaccuracies are inaccurate (using the same sources that were leveraged for the original disinformation)
  3. Outline the impact of the disinformation to ensure clarity among readers what the possible intent may be.
  4. Provide substantial documentation, verifiable evidecne, and other related information to prove a potential conflict of interest exists between CoinDesk and Bitfinex (quit)

Another Bitfinex Apology by CoinDesk

Note: "Apology" used here to mean 'argument in defense' / 'vindication'

The article can be found on CoinDesk's official site here = https://www.coindesk.com/nyag-tether-bitfinex-loan-documents-coming-weeks

Additionally, an archive of the site was curated as well (for the purposes of historical preservation) = https://archive.vn/wip/eey9x

Flawed From the Start

What initially caught our attention was the extremely misleading outright lie told directly in the headline, which erroneously states, "New York Attorney General Says Bitfinex, Tether Could Complete Loan Document Handover in 'Weeks'".

As a bit of brief background, the "Loan Document" (inaccurate as well) issue that this article mentions is in reference to the allegations of fraud made by the New York Attorney General on April 30th, 2019 (yes, over a year ago to date).

The initial press release announcing the New York AG's decision to bring action against Bitfinex and Tether for fraud can be fond here: https://ag.ny.gov/press-release/2019/attorney-general-james-announces-court-order-against-crypto-currency-company

Long story, short Bitfinex's payment processor (currently under federal indictment) was subject to two bank raids in 2018, by different jurisdictional enforcement agencies that resulted in well over $1 billion (in USD value) being seized by those respective governments in the aftermath.

Open source reporting curated by the author of this article provided evidence that all but proved that funds in those accounts belonged (at least in part) to customers at Bitfinex's exchange - a fact later confirmed in the New York Attorney General's initial Petition filed in the Southern District's NY Supreme Court in May 2019.

Curiously, immediately following CoinTelegraph's report informing the public about the bank raid (in Poland), Bitfinex responded by categorically denying knowledge of the event or that it had any palpable impact on their business operations. This, of course, also turned out to be patently false as we saw from the New York Attorney General's initial filing, lengthy excerpts of a conversation between a figure named "Merlin" and Bitfinex (Giancarlo Devasini) and 'Oz' (from Crypto Capital Co; known as Oz Yosef and also later added to the original DOJ indictment against Reginald Fowler and Ravid Yosef).

Below is an excerpt of that conversation:

Unfortunately, the quality of the photo above is extremely grainy (for whatever reason). However, it is clear enough to be legible for some reading it in a "firsthand" manner (i.e., accessing the court filing directly from the NYAG, then scrolling to the relevant portion of the filing that contains this excerpt).

In the interest of saving readers the hassle, the excerpted portion of the conversation between Merlin and Oz is transcribed below:

Merlin: "I hope you will be able to send something big pretty soon, the situation is not looking good"

CCC: "We are pushing everyday. The previous KNF from Poland just resigned over scandal of shaking down banks ..."

CCC: "So it's very good for us to get funds release asap"

CCC: [There is a link sent by the individual in this portion of the conversation, but the entire link is not legible ; based on the context, it seems likely that the link was to an article detailing the 'KNF' from Poland resigning as mentioned in the prior  message sent by this account]

Merlin: "any realistic estimate about Poland?"

Merlin: "it was july when you told me for the first time it was to be expected any time"

Not to belabor the point, but quick notes here:

Merlin was extremely knowledgeable about the bank raid conducted by the Polish government. In fact it appears the made sure to stay abreast of the situation in the hopes that they would be able to get these funds released (not sure why they anticipated this happening though).

Again, this stands starkly in contrast to the statement that Bitfinex gave to CoinTelgraph (linked above), claiming that they had no knowledge that the bank had indeed been raided by Polish authorities while insisting that if such an event had transpired, then it would have no meaningful impact on Bitfinex (that latter statement alone about this event having no impact on the solvency / operations  of BItfinex was, in itself, proven to be a lie as we can see from the pleas being made by Giancarlo).

The criminality of Bitfinex's actions are patently obvious - but, as we can see through just the brief chronicling of certain events that have transpired with Bitfinex, their criminality is patently obvious in the blockchain space.

For the reasons given above (among many others), the piece that CoinDesk published today (December 11th, 2020), is worthy of significant scrutiny.

As proven above, Bitfinex has an extensive history of misleading their customers in public as well as putting their funds at significant risk by engaging in activities such as laundering funds on behalf of the Colombian Cartel with said customer funds.

To make matters worse, if the New York Attorney General wins their case against Bitfinex, then it can be said that it was proven in a court of law that Bitfinex further maligned their customers and generally all users in the blockchain sphere by injecting counterfeit money into the ecosystem

Digging into the Piece By CoinDesk

The article opens by stating:

"In a letter filed with the New York Supreme Court on Wednesday, the NYAG said stablecoin issuer Tether and cryptocurrency exchange Bitfinex had been cooperating with its inquiry."
"The NYAG also noted the timeline for documents to be handed over would come after a deadline, previously mediated by the court, that once again ordered the crypto companies to hand over documents outlining their financial relationship."

Contrary to the fabricated narrative above, this article will:

Show that the NYAG did not make this statement, nor did it file any documents stating such

The NYAG explicitly asked for the deadline to be shortened to 60 days instead of 90 as the courts had determined when Bitfinex was previously denied.

Bitfinex has not been cooperating. In fact, quite the opposite. Rather than producing any documents for the New York Attorney General's Office, they have attempted to motion for dismissal (numerous times;  all attempts failed), question the NY AG's jurisdictional authority (which the courts later affirmed in favor of the NYAG), before ultimately settling on the argument that the document collection request by the New York AG was overly broad in scope - even going as far as to suggest that it would be "impossible" for the exchange to produce adequate documentation for any of its financial records due to the 'complexities' associated with the supposedly unique standards of accounting associated with digital currencies. As the docket reflects, the courts were also not in agreement with Bitfinex on this issue either.

Visiting the Actual Court Docket to Draw Accurate Information About What's Going On

One thing that the author of this piece does deserve credit for is providing a direct hyperlink to the filing in question where the New York Attorney General's Office allegedly signaled to the courts that Bitfinex was "cooperating" (which would be remarkable for the AG to state after demanding Bitfinex to cooperate with its demands for the better part of the last 1.5 years).

See below:

In specific, we're going to follow the link in the first box, which points us here: https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=2AsYgvjJAsSdalpfkInbHA==

Evaluating the iFinex vs. NYAG Docket

Since we're here, we might as well get ourselves up to date on everything that has transpired between Bitfinex and the New York Attorney General since its initial filing in May 2019.

Specifically, we'll start with the linked court filing from the CoinDesk article (see below):

Our first major clue that this letter to the court was not filed by the New York Attorney General's Office can be found directly in the first line of the document where it states:

"I write on behalf of the parties In re: James v. iFinex, Index No. 450545/2019"

From that statement alone, it should be patently obvious that the individual / entity submitting this letter cannot be the New York Attorney General, because they don't represent both parties in the case (they just represent themselves...as does Bitfinex).

The next statement in the document gives us a major clue as to who this is writing to the court.

Specifically, it states:

"As you may recall, a virtual hearing on September 17, 2020 the Court ordered an extension of the injunction in this matter for ninety (90) days, at which point the OAG was to inform the Court whether it had received sufficient information in response to the document portion of the 354 Order to determine whether a further extension should be requested."

The filing goes on to state:

"You may also recall that in our previous communications to the Court, the parties had agreed upon a document production protocol and had mediated disputes amongst themselves."

Notably, that last excerpt mentions the New York Attorney General and Bitfinex in the third person and also mentions that the parties were tasked with developing an adequate "document production" protocol, which is something that should not be seen as an amicable 'coming to terms', but rather an engagement that Bitfinex no longer has a say or choice in since they have expired all possible appeals and motions to dismiss at this point.

Revisiting the Referenced Adjudication

To gain a better perspective on what's going on, we're going to go ahead and visit the main docker for the iFinex et al v. NYAG case.

First, we must visit the main site for the New York courts, which can be found here: https://iapps.courts.state.ny.us/nyscef/HomePage

If one scrolls down the page, they'll find a section that says, 'Search as Guest'. That should be clicked.

That will take us to the following page:

There are a lot of entries on the form for one to fill out if necessary. Fortunately, though only the top one labeled 'case number' (boxed in red in the photo above) is necessary for us to advance.

If you're looking for the case number or forgot - don't worry, we have that for you.

It's: 450545/2019

For future reference, this can be found in the top right corner of most court dockets in the United States (federal or state):

Let's go back to the form now and fill that in:

Upon hitting 'search', we'll find ourselves at the main docket page, which includes all 139 updates to the case (thus far) as well as the accompanying documents submitted by both sides (well, just the NY AG up to this point ; Bitfinex has only filed rebuttals and appeals thus far).

In specific, we want to refer to document #138 in the docket - which will explain (in full) the nature of the linked document from the CoinDesk article:

The documen, which can be accessed directly on the docker, clarifies (without equivocation) exactly what's going on:

As we can see above, court appointed mediators were enlisted to facilitate the document transfer process between Bitfinex and the New York Attorney General.

Tags

cryptomedication

Happy to serve and help wherever I'm needed in the blockchain space. #Education #EthicalContent #BringingLibretotheForefront

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