Case 2:20-cv-16398 Document 1 Filed 11/18/20 Page 1 of 12 PageID: 1

Peter J. Pizzi
Selina M. Ellis
WALSH PIZZI O’REILLY FALANGA LLP
Three Gateway Center
100 Mulberry Street, Fifteenth Floor
Newark, New Jersey 07102
Tel: (973) 757-1100

Of Counsel:
Charles J. Harder (to be admitted pro hac vice)
HARDER LLP
100 Park Avenue, Sixteenth Floor
New York, New York 10017
Tel: (212) 799-1400

Counsel for Plaintiff Binance Holdings Limited

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

BINANCE HOLDINGS LIMITED, Civil Action No. __________________

Plaintiff, COMPLAINT

v. JURY TRIAL DEMANDED

FORBES MEDIA LLC, Filed Electronically

MICHAEL DEL CASTILLO and
JASON BRETT,

Defendants.

Plaintiff Binance Holdings Limited (“Binance”), by and through its undersigned attorneys,

hereby complains against defendants Forbes Media LLC, Michael del Castillo and Jason Brett

(collectively, “Defendants”) as follows:

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SUMMARY OF ACTION

1. Binance is a cryptocurrency exchange.

2. On October 29, 2020, Defendants published a story on the Forbes Media, LLC

(“Forbes”) website bearing the headline: “Leaked ‘Tai Chi’ Document Reveals Binance’s

Elaborate Scheme To Evade Bitcoin Regulators,” at

www.forbes.com/sites/michaeldelcastillo/2020/10/29/leaked-tai-chi-document-reveals-binances-

elaborate-scheme-to-evade-bitcoin-regulators (the “Story”).

3. The Story contains numerous false, misleading and defamatory statements about

Binance. Among other things, the Story falsely states that Binance created an “elaborate scheme

to evade Bitcoin regulators,” “conceived of an elaborate corporate structure designed to

intentionally deceive regulators,” had an “ulterior motive” in setting up a U.S. entity, sought to

“execute a bait and switch,” sought to “surreptitiously profit from crypto investors in the United

States,” “funneled back” revenue from its U.S. entity to the parent company, used its U.S. entity

as “a decoy,” sought to “undermine the ability of anti-money laundering and U.S. sanctions

enforcement to detect illicit activity,” is “reminiscent of Amway-style multi-level marketing

organizations,” “has been side-stepping American regulators,” exhibits a “key ‘red flag’

characteristic of money laundering” and that “there is speculation that the FBI and the IRS may

be investigating” Binance.

4. All of these statements by the Defendants, as well as the full list of statements

from the Story provided further below, are false and defamatory. Among other things, neither

Binance, nor anyone on its behalf, created the purported 2018 slideshow presentation referenced

in the Story. Binance also has not implemented any of the suggestions in that proposal, which

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was created by a third party. The Story falsely states that “senior Binance executives” both

created and implemented it.

5. Importantly, Binance does not violate, and fully complies with, all applicable

laws, rules and regulations in its operations. Binance does not seek to evade or “side-step” any

regulatory entities in any jurisdictions in connection with their role in ensuring that all laws, rules

and regulations of their jurisdictions are complied with.

6. Binance also does not move or “funnel back” revenue from a U.S. entity to

Binance, nor does Binance engage in any activity that could even remotely be described as

“money laundering.”

7. Defendants’ false public statements, misrepresentations and innuendo that

Binance does not comply with applicable law, seeks to evade regulators, and is engaged in

activity “characteristic of money laundering” are highly damaging to Binance.

8. Prior to filing this action, Binance sent Defendants a letter demanding that

Defendants remove, retract and apologize for the numerous false statements in the Story,

identified herein. Defendants refused to do so, thereby necessitating this lawsuit. Binance has

filed this action to protect its hard-earned reputation and business, which has been severely

damaged by Defendants’ false and defamatory statements and wrongful conduct.

THE PARTIES

9. Plaintiff Binance Holdings Limited is a limited company organized under the

laws of the Cayman Islands.

10. On information and belief, defendant Forbes is a New Jersey limited liability

company, with its principal place of business in Jersey City, New Jersey.

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11. On information and belief, defendant Michael del Castillo is an individual

residing in or around New York City, New York, and is a staff writer for Forbes.

12. On information and belief, defendant Jason Brett is an individual residing in or

around Washington, D.C., and is a contributing writer for Forbes.

13. On information and belief, Defendants, and each of them, were and are the agents,

licensees, employees, partners, joint-venturers, co-conspirators, owners, principals and/or

employers of each other and each of them are, and at all times mentioned herein were, acting

within the course and scope of that agency, license, partnership, employment, conspiracy,

ownership or joint venture. Upon further information and belief, the acts and conduct herein

alleged of each of the Defendants were known to, authorized by and/or ratified by the other

Defendants and each of them.

JURISDICTION AND VENUE

14. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 because

the parties are completely diverse and the amount in controversy exceeds the statutory minimum.

15. Venue is proper under 28 U.S.C. § 1391(b)(1) & (b)(2), in that the primary

defendant, Forbes, is a domiciliary of the state of New Jersey and resides in this judicial district.

The other defendants (Forbes’ writers who wrote the Story) do business in this judicial district in

connection with their services for and on behalf of Forbes, including in connection with writing

the Story at issue. Thus, a substantial part of the events or omissions giving rise to this action

also occurred in this judicial district.

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STATEMENT OF RELEVANT FACTS

16. Forbes published the Story, written by defendant del Castillo “[w]ith additional

reporting from [defendant Brett]” on October 29, 2020. It contains the following false,

misleading and defamatory statements about Binance:

a. Binance is pursuing an “Elaborate Scheme To Evade Bitcoin Regulators.”

b. Binance “conceived of an elaborate corporate structure designed to

intentionally deceive regulators.”

c. Binance sought to “surreptitiously profit from crypto investors in the United

States.”

d. The document on which the Story is based was “created by” “senior Binance

executives.”

e. “While Binance appears to have gone out of its way to submit to U.S.

regulations by establishing a compliant subsidiary, Binance.US, an ulterior

motive is now apparent.”

f. Binance had a “strategic plan to execute a bait and switch.”

g. “While the then-unnamed entity set up operations in the United States to

distract regulators with feigned interest in compliance, measures would be put

in place to move revenue in the form of licensing fees and more to the parent

company, Binance.”

h. “All the while, potential customers would be taught how to evade geographic

restrictions while technological work-arounds were put in place.”

i. “[Binance] Chief compliance officer [Samuel] Lim had previously sent an

email to Forbes confirming that [Harry] Zhou had been a Binance employee”

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j. “[M]any of the specifics outlined within” the scheme “are already in place.”

k. The plan discussed in the Story was created by a “former Binance employee.”

l. “[Binance sought] to undermine the ability of anti-money laundering and U.S.

sanctions enforcement to detect illicit activity.”

m. Strong implication that “engagement of CipherTrace was part of a larger

investigation into Binance or Binance.US” by the Securities and Exchange

Commission.

n. Under Binance’s plan, “revenue from the U.S. business could be funneled

back to Binance, the parent company. . . . But unlike an actual subsidiary

whose parent company could be held accountable for regulatory violations,

the Tai Chi entity would have little more than a contractual relationship . . . .

Essentially, it would be a decoy.”

o. “Binance.US is expected to engage the Securities and Exchange Commission,

the Commodities Futures Trading Commission and the New York Department

of Financial Services, but importantly . . . it doesn’t expect to gain approvals

from any of them.”

p. “Binance.US [is] the Tai Chi entity” referenced in the document on which the

Story is based.

q. “[Binance is] reminiscent of Amway-style multi-level marketing

organizations.”

r. “Binance has been side-stepping American regulators.”

s. Binance exhibits a “key ‘red flag’ characteristic of money laundering.”

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t. “[T]here is speculation that the FBI and the IRS may be investigating”

Binance.

17. The foregoing statements are false, misleading and highly defamatory to Binance.

Neither Binance, nor anyone on its behalf, created the purported 2018 slideshow presentation

referenced in the Story. The person who Forbes claims created it, Harry Zhou, is not and never

was an employee of Binance. Binance has not implemented any of the suggestions in the

proposal, which was created by a third party. The Story falsely states that Binance both created

and implemented the plan.

18. Binance does not violate, and fully complies with, all applicable laws, rules and

regulations in its operations. Binance also does not seek to evade or “side-step” any regulators in

any jurisdictions.

19. Binance also does not “funnel back” or otherwise move revenue from any U.S.

entity to Binance, nor does Binance engage in any activity that could even remotely be described

as a “money laundering.”

20. Defendants’ false public statements, misrepresentations and innuendo that

Binance does not comply with applicable law, seeks to evade regulators, and is engaged in

activity “characteristic of money laundering,” among other false statements referenced above,

are highly damaging to Binance.

21. Defendants were aware, when they published the Story, that the purported 2018

slideshow presentation was nothing more than a proposal by a third party, and that it was not a

“strategic plan” created by Binance. Defendants also were aware that the person who

purportedly created it, Harry Zhou, was not a Binance employee, nor acted on its behalf.

Defendants also grossly mischaracterized the 2018 slideshow proposal in the Story as being an

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effort to evade regulators, “funnel back” money from a U.S. entity to Binance, and engage in

activity “characteristic of money laundering.” In doing so, Defendants were aware that all such

statements were false and/or grossly misleading. No facts or evidence in Defendants’ possession

at the time of publishing the Story, or otherwise, suggested, let alone demonstrated, that:

(a) the U.S. entity discussed in the Story “funneled back” or moved any money to

Binance;

(b) Binance engaged in any activity that truthfully could be described as

“characteristic of money laundering”; or that

(c) Binance engaged in any activity that could truthfully be described as evading

regulators, or violating any law, rule or regulation of any jurisdiction.

Nonetheless, Defendants proceeded to publish the false, misleading and defamatory statements

in the Story, knowing that they would cause substantial harm to Binance. Defendants published

these statements knowing that they were false, or made them with reckless disregard for the

truth.

FIRST CAUSE OF ACTION

(Defamation)

22. Binance realleges and incorporates by this reference the allegations in Paragraphs

1 through 21 of this Complaint as though fully set forth herein.

23. The statements by Defendants set forth in Paragraph 16 herein were false.

24. The false statements were of and concerning Binance.

25. To the extent that actual malice is required to be pleaded and proven, Defendants

made the false statements either knowing that the statements were false or with reckless

disregard for the truth.

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26. The false statements are not protected by any privilege or authorization.

27. Binance has been seriously damaged as a direct and proximate result of

Defendants’ publication of the false statements, the full amount of which will be proven at trial,

believed to be in the millions of dollars. Further, the false statements constitute defamation per

se because they impugn the basic integrity, creditworthiness and/or competence of Binance’s

business.

28. Defendants’ conduct was willful, malicious, and oppressive, in that Defendants

knew full well that the false statements would harm Binance. As such, in addition to

compensatory damages and/or presumed damages, Binance demands punitive damages relating

to Defendants’ publication and maintenance of the above-referenced false statements, in an

amount to be determined at trial.

PRAYER FOR RELIEF

WHEREFORE, Binance respectfully requests:

i. An award of compensatory damages in an amount to be determined at

trial;

ii. An award of punitive damages in an amount to be determined at trial;

iii. An order granting permanent injunctive relief to prevent Defendants from

making the same defamatory statements about Binance, and requiring

Defendants to permanently remove the defamatory statements about

Binance;

iv. An award of all costs of suit; and

v. An award of such other and further relief as the Court deems proper.

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DEMAND FOR JURY TRIAL

Pursuant to Fed. R. Civ. P. 38(b), Binance hereby demands a trial by jury on all issues so

triable in this action.

Dated: November 18, 2020 WALSH PIZZI O’REILLY FALANGA LLP

By: /s Peter J. Pizzi_________________

Peter J. Pizzi
Selina M. Ellis
Three Gateway Center
100 Mulberry Street, Fifteenth Floor
Newark, New Jersey 07102
Tel: (973) 757-1100

Of Counsel:
Charles J. Harder (to be admitted pro hac vice)
HARDER LLP
100 Park Avenue, Sixteenth Floor
New York, New York 10017
Tel: (212) 799-1400

Counsel for Plaintiff Binance Holdings Limited

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RULE 11.2 CERTIFICATION

I hereby certify that, to the best of my knowledge, the matter in controversy is not the

subject of any other pending or anticipated litigation in any court or arbitration proceeding, nor

are there any non-parties known to Plaintiff that should be joined to this action. In addition, I

recognize a continuing obligation during the course of this litigation to file and to serve on all

other parties and with the Court an amended certification if there is a change in the facts stated in

this original certification.

Dated: November 18, 2020 WALSH PIZZI O’REILLY FALANGA LLP

By: /s Peter J. Pizzi___________________

Peter J. Pizzi
Selina M. Ellis
Three Gateway Center
100 Mulberry Street, Fifteenth Floor
Newark, New Jersey 07102
Tel: (973) 757-11100

Of Counsel:
Charles J. Harder (to be admitted pro hac vice)
HARDER LLP
100 Park Avenue, Sixteenth Floor
New York, New York 10017
Tel: (212) 799-1400

Counsel for Binance Holdings Limited

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RULE 201.1 CERTIFICATION

I hereby certify that the above-captioned matter is not subject to compulsory arbitration

in that the Plaintiff seeks, inter alia, damages in excess of $150,000, exclusive of interest and

costs and any claim for punitive damages, and injunctive relief.

Dated: November 18, 2020 WALSH PIZZI O’REILLY FALANGA LLP

By: /s Peter J. Pizzi___________________

Peter J. Pizzi
Selina M. Ellis
Three Gateway Center
100 Mulberry Street, Fifteenth Floor
Newark, New Jersey 07102
Tel: (973) 757-11100

Of Counsel:
Charles J. Harder (to be admitted pro hac vice)
HARDER LLP
100 Park Avenue, Sixteenth Floor
New York, NY 10017
Tel: (212) 799-1400

Counsel for Binance Holdings Limited

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