Christopher Harborne defamation suit: WSJ motion to dismiss, Bitfinex/Tether, Bank of America, Sackville Bank

By Amy Castor and David Gerard

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Christopher Harborne, known in Thailand as Chakrit Sakunkrit, is one of the four largest shareholders of crypto exchange Bitfinex and stablecoin issuer Tether, owning 12% of each.

Harborne is suing the Wall Street Journal in Delaware over a March 2023 story on Tether that originally named him in connection with the companies and their banking difficulties.

Dow Jones, the publisher of the Journal, filed a motion to dismiss Harborne’s complaint on April 16. [Motion to dismiss, PDF; Opening brief, PDF, archive; case docket]

The key thing that does in Harborne’s claim is that the allegedly defamatory statement appears to be, er, provably true.

 

Christopher Harborne promotional photo

 

Throw this trash out

The motion to dismiss is on the grounds of failure to state a reasonable claim. Dow Jones also argues the charges should have been filed in New York, where the Journal is headquartered, and not in Delaware, where the only link to the state is that Dow Jones is incorporated there.

Dow Jones reiterates that the WSJ never heard a peep from Harborne until nine months after the article was published.

After some back-and-forth with Harborne’s lawyers, the WSJ removed five paragraphs about Harborne from the March 2023 story because, although they were “substantially true,” they “did not meet its exacting editorial standards.”

But Dow Jones holds that Harborne’s complaint must fail because everything the article said about him was true — and they even attach Signature Bank documents demonstrating it:

Harborne’s claim for defamation per se is based on only part of one sentence — and no more in the 1,387-word Article — which reports that he was on a “Hotlist” at Signature Bank. This claim should be dismissed with prejudice because Plaintiff has not pled facts from which it is reasonably conceivable that the statement is not substantially true. In addition, among the Signature Bank documents is an internal Signature Bank email dated February 2018 with the subject line “Hotlist additions” that adds “Chakrit Sakunkrit” to the Hotlist. He will therefore never be able to carry his burden of establishing that the Hotlist Statement is false.

In any US defamation claim, you must prove there was actual malice — that the defendant knew the statement was false or demonstrated disregard for the truth. Dow Jones says that Harborne fails to show actual malice — and, given the claim is, in fact, provably true, he cannot show actual malice:

… the Signature Bank documents establish that (1) Harborne, despite the allegations in the Complaint, is closely associated with Bitfinex and Tether; (2) Signature Bank added the Sakunkrit name to a Hotlist; (3) AMLGP didn’t disclose in its due diligence submission that Harborne also used the Sakunkrit name or that he had any connection to Bitfinex or Tether; and (4) Signature Bank had concerns about transactions between AMLGP and Bitfinex and ultimately closed AMLGP’s bank account. In light of those facts, Plaintiffs will never be able to establish that the Article was published with subjective awareness of falsity.

(AMLGP is AML Global Payments, one of the AML Group of companies that is a plaintiff in the case.)

Dow Jones filed three exhibits with its motion. Exhibit 1 is the February 2023 WSJ story pointing to Harborne as one of the main shareholders of Tether. Exhibit 3 is a message that WSJ reporter Ben Foldy sent Harborne via LinkedIn on January 27, before the article was published. These exhibits are there to demonstrate WSJ’s early efforts to reach out to Harborne and his failure to respond. [Exhibit 1, PDF; Exhibit 3, PDF]

Exhibit 2 is the smoking gun bundle of “correspondence and records spanning from February 23, 2018, to March 13, 2019, that relate to Signature Bank’s treatment of bank accounts directly or indirectly connected to Bitfinex.” This exhibit is sealed.

Harborne/Sakunkrit and Bitfinex

Dow Jones sets out a timeline, based on documents that we presume are in the sealed Exhibit 2.

On February 22, 2018, Signature Bank closed two Bitfinex accounts “based on negative news and some other items that were cause of concern.”

The name Chakrit Sakunkrit was added to Signature’s hotlist the next day — because, per Signature, he was an “Ultimate Beneficial Owner, Authorized signer or business associate of [then-Bitfinex CEO] Phil Potter and/or Bitfinex.”

(Note: Potter was not Bitfinex’s CEO at this time, but its chief strategy officer.)

Bitfinex tried again to open a Signature account on October 10, 2018. In doing so, they identified Chakrit Sakunkrit as a major shareholder.

Why did Signature not want to have anything to do with Bitfinex? The “red flag” was that Bitfinex worked through various “‘payment processors’ or account holders” whose identities or links to Bitfinex were unclear.

This was in November 2018, when Bitfinex was desperate to find a stable US dollar banker — and just after $850 million at  dubious payments processor Crypto Capital had been frozen.

AML Global Payments applied to open a Signature account on November 20, 2018. AMLGP submitted a due diligence package that identified Harborne as the signatory — but didn’t mention the name Chakrit Sakunkrit or Harborne’s stake in Bitfinex.

AML Global Payments, Bank of America, and Sackville Bank

Sackville Bank & Trust is a Cayman Islands bank that Bitfinex appears to have been using in early 2019. We know this because, on January 18, 2019, Deltec’ed (@ExkrementKoin on Twitter) revealed “a recent international wire transfer from Bitfinex to a trader, presumably through a US intermediary bank.” [Medium, archive]

Signature Bank was also aware of the Bitfinex-Sackville connection.

In January 2019, Harborne’s company AML Global Payments opened an account at Signature using Harborne’s English name.

AMLGP was planning to fund this account from a Bank of America account. In early February 2019, Signature looked at statements from this BofA account. Signature’s compliance officer noticed that in October and November 2018 — which happened to be when Bitfinex was in the throes of its extreme banking issues — “about $63 million came into the account at B of A from Sackville Bank (I presume Bitfinex).” However, “Bitfinex was not mentioned anywhere in the paperwork that was provided.”

He also noted that these deposits were “far in excess of the account’s previous average monthly activity of $6-8 million in/out.”

Signature “questioned AMLGP about this unusual activity, including the transactions from Sackville Bank.”

AMLGP’s Signature account was closed soon after.

What happens next?

Dow Jones wants this case put in the trash. They are unlikely to accept Harborne’s claim being dropped without prejudice because that would leave Harborne free to bring the bad claim again.

Harborne is unlikely to want the Exhibit 2 documents released. If the case continues, more fragments from them will be aired. Harborne’s links to Sackville Bank are new information, for example.

We continue to consider this an ill-advised case to have brought at all. It should be dismissed and the multiple bloggers that Harborne sent legal threats to should be free to restore their postings.