A Splash of Stupidity: Why CZ Suing Forbes Makes No Sense
The cryptocurrency space always finds new ways to surprise me, and while a financial entity attempting to silence journalists isn’t a new concept, it’s funny and pretty shocking to see a someone plod through the same mistake twice without learning anything.
Before we go further, I AM NOT A LAWYER. I don’t intend on becoming a lawyer. If you’re looking for individuals far more well versed on the topic of financial laws and, in particular, cryptocurrency and law, please follow lex_node, NelsonMRosario, or propelforward on Twitter. I often disagree with them, but they’re knowledgable and reasonable.
There are a few reasons a financial entity may be making a mistake when bringing a lawsuit against a journalist or media outlet, so let’s go over some basic ones.
SLAPP, or strategic lawsuit against public participation, is a term coined in the 1980s and is pretty much exactly what it describes: someone, some company, or some entity brings a lawsuit, or a series of lawsuits, against someone or something else in the hope that it will briefly, or permanently, silence them. These cases are almost always brought without the intention to win, instead the goal being to tie the other individual up in such expensive legal costs and monotonous legal proceedings that they give up, and therefore, shut up.
A NY Judge said of SLAPPs, “Short of a gun to the head, a greater threat to First Amendment expression can scarcely be imagined.”
In most US jurisdictions, SLAPP lawsuits are now illegal, and if it’s determined that that was the intention for bringing a lawsuit, the entity will be prosecuted for it. A few notable examples are Oprah versus Texas Cattle Ranchers, Scientology versus the Internet, and, perhaps the most famous, when Barbra Streisand sued a photographer and coined the term Streisand Effect.
The problem with trying to sue a journalist making a claim about emails sent, employees statements, and internal affairs, is that you have to prove beyond a reasonable doubt that you didn’t do what was claimed in the article and that the intention of the writer was to harm you or your business.
That’s a big hurdle to jump over, especially when you now have to turn over emails, employee names, and other discovery items to the court (to clarify, discovery is when one party requests information from another party before the beginning of a legal proceeding). Handing over this discovery, especially if you operate in a legal gray zone, can open an entity up to more lawsuits than the lawsuit they initially brought.
A good example of this stopping a company from suing was when Bitfinex claimed it would bring a suit against Wells Fargo, but quickly dropped the case. If they had been required to hand over not-so-flattering discovery it very well could’ve opened them up to further legal inquiries by numerous government agencies.
A Waste of Money and Resources
When suing a journalist/media entity it’s best to hope they don’t have a team of good lawyers, money, and time to spend fighting the case and that they’d quickly settle, because if that isn’t the situation, it means that the company or individual bringing the case is paying lawyers out of pocket for possibly years to fight a legal battle they will likely lose, instead of having those lawyers fight to get regulations amended or regulators become more friendly.
And when an entity loses the case, they may have to pay the other side’s legal bills, as well.
In case you somehow missed it, Changpeng Zhao, or CZ from Binance, is apparently suing Forbes and two of their journalists for publishing a leaked internal document. CZ was quite proud of this:
This isn’t the first time he’s promised to sue a journalistic entity. Almost exactly a year ago, CZ promised to bring a suit against Frank Chaparro, Larry Cermak, and The Block cryptocurrency news organization.
The lawsuit never materialized.
Many of us wait patiently for this suit to either be dropped or opened up to discovery. I am not generally a fan of Forbes, but I am wishing them all the best against yet another frivolous lawsuit from just another serial huckster.
Stay skeptical friends.