No, Twitter is not a valid way to bring crypto action against Binance executives, according to judge’s rules

The mystery of the physical location of Binance executives is no accident, according to lawyers at Davillier Law Group. Davillier filed a class action lawsuit in federal court in Prescott, Arizona, in September, accusing Binance, its subsidiary CoinMarketCap OpCo, and several individual defendants of rigging the ranking of cryptocurrencies to lower demand for HEX tokens, that would compete with a Binance token. (Reuters) – Yi He, co-founder of cryptocurrency exchange Binance Capital Management Co. Ltd., has a little joke in her bio on Twitter: She says her location is Mars. Binance Chief Growth Officer Ted Lin identifies his location on Twitter as “decentralized.” Binance CEO Changpeng Zhao does not include any locations in his Twitter profile.

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The corporate defendants, represented by Goodwin Procter, have accepted service of the lawsuit. But Davillier could not find He, Lin and Zhao. The company hired a private investigator, a former Navy bounty hunter. The investigator reported that despite an “exhaustive” search, he “was not able to determine with certainty even in which country Changpeng Zhao, Yi He and Ted Lin were located.” Zhao could be in Taiwan, or possibly Singapore, the investigator said. Yi He could be in Malta. Lin is believed to have lived in Dallas, but the investigator could not confirm this.


The obscurity surrounding their whereabouts, wrote Davillier’s attorneys George Wendt and Alexander Kolodin in a Nov. 15 case filed with U.S. District Judge Susan Brnovich of Prescott, is consistent with Binance’s deliberate efforts to cover up the location of his business “to avoid regulators and avoid litigation.” The company was founded in China in 2017, according to the filing, but has since moved its headquarters to Japan and then Malta, with a holding company registered in the Cayman Islands and recent reports of a new base in Ireland.

Binance has repeatedly emphasized its decentralized operations, with its executives touting the company’s international reach. The plaintiffs cited a 2020 CoinDesk report titled “Binance Has No Headquarters,” which recounted an interview with Zhao at a cryptocurrency conference. When the interviewer asked the CEO of Binance where the company is based, the article said, “Zhao blushed; he stammered. He looked off camera, maybe to an assistant. “Well, I think that’s the beauty of blockchain, right, so you don’t have to… like, where is Bitcoin’s office, because Bitcoin doesn’t have an office. “

“No one knows exactly where Binance’s head office is or where its officers are,” Davillier’s lawyers told Brnovich. “The individual defendants have fallen to the ground and are international ‘ghosts’. “

But this is precisely the problem with using Twitter to serve an accused whose whereabouts are unknown, Brnovich said in a Dec. 14 notice dismissing the plaintiffs’ request for an alternative service. Zhao, for example, could be in Taiwan or Singapore. Complainants could serve him via Twitter if he is in Taiwan, which has not acceded to the Hague Convention, Brnovich said – but not if he is in Singapore, which is a signatory to the Hague Convention. . Without knowing which country Zhao and his colleagues are in, the judge concluded, she cannot determine whether the service via Twitter would violate international law.

The plaintiffs’ attorneys asked the judge to allow them to serve Zhao, He, and Lin through Twitter. All three have verified Twitter accounts, according to the November 15 motion, and all appear to regularly check their accounts. Federal courts are increasingly comfortable with service via social media, according to the brief, as long as this is permitted by international treaties.

The judge acknowledged other cases in which the courts allowed the social media service. In 2013, a New York Federal District judge granted the Federal Trade Commission’s request to serve robocall defendants in India via Facebook. In 2014, a Virginia Federal District judge ruled that the WhosHere, Inc networking app could serve a Turkish defendant through posts on Facebook and LinkedIn. And in 2016, a federal magistrate in San Francisco authorized the St. Francis Assisi nonprofit to use Twitter to serve a Kuwaiti national accused of funding a terrorist operation.

But in all of these cases, Brnovich wrote in Tuesday’s opinion, the plaintiffs knew the defendants’ country of residence. Judges assessing plaintiffs ‘requests for an alternative service could determine whether the defendants’ home countries allowed the use of a notice via social media.

“Unlike those cases, here the defendants are believed to be Chinese nationals with potential residences in a number of countries including Taiwan, Singapore, Malta or the United States – to name a few,” wrote the judge. “The court can only speculate on whether the service by Twitter is banned by an international agreement because the country of residence cannot be identified. “

I contacted Zhao, He and Lin – on Twitter, of course – but got no response. Goodwin Proctor, who represents the corporate defendants, did not respond to an email question about the plaintiffs’ allegations that Binance moved its headquarters to evade regulators.

Plaintiffs’ attorney, Wendt of Davillier, said he understood why the judge dismissed his petition, although he said it was frustrating that the law was taking time to catch up with technology. “Zhao is intentionally hiding where he is,” Wendt said. “Binance says they exist in the cloud. It would appear that the cloud service would be appropriate.

On Thursday, Brnovich granted the plaintiffs’ request for a 60-day extension of time to serve Zhao, He, and Lin with the collective complaint. “We’ll find them and we’ll nail them,” Wendt said. “There has to be a way for us to get over it. “

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