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(Reuters) – Yi He, co-founder of cryptocurrency exchange Binance Capital Management Co. Ltd, has a little joke in her Biography Twitter: She lists her location as Mars. Binance Chief Growth Officer Ted Lin identifies its location on Twitter as “decentralized”. Binance CEO Changpeng Zhao does not include any location in his Twitter profile.
The mystery of the physical location of Binance executives is no accident, according to lawyers from the Davillier Law Group. Davillier filed a class action complaint in federal court in Prescott, Arizona, in September, accusing Binance, its subsidiary CoinMarketCap OpCo, and several individual defendants of rigging cryptocurrency rankings to lower demand for HEX tokens, which would compete with a Binance token .
The corporate defendants, represented by Goodwin Procter, have accepted service of the lawsuit. But Davillier couldn’t find He, Lin and Zhao. The company has hired a private detective, a former Navy bounty hunter. The inspector reported that despite an “exhaustive” search, he “was unable to determine with certainty even what country Changpeng Zhao, Yi He and Ted Lin were in”. Zhao could be in Taiwan, or possibly Singapore, the investigator said. Yi He could be in Malta. Lin was said to be living in Dallas, but the investigator couldn’t confirm that.
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The darkness surrounding their whereabouts, wrote Davillier lawyers George Wendt and Alexander Kolodin in a Deposit November 15 to U.S. District Judge Susan Brnovich of Prescott, is consistent with Binance’s deliberate efforts to obfuscate the location of its business “to avoid regulators and dodge 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 highlighted its decentralized operations, with 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 Binance’s CEO where the company is based, the article said, “Zhao blushed; he stammered. He looked off camera, possibly an assistant. “Well, I think that’s the beauty of blockchain, okay, so you don’t have to… like, where’s the Bitcoin office, because Bitcoin doesn’t have an office.”
“Nobody knows exactly where Binance’s headquarters are or where its executives are,” Davillier’s lawyers told Brnovich. “The individual defendants have gone to the ground and are international ‘ghosts’.”
The plaintiffs’ attorneys asked the judge to allow them to serve Zhao, He, and Lin via Twitter. All three have verified Twitter accounts, the Nov. 15 motion said, and all seem to check their accounts regularly. Federal courts are increasingly comfortable with service via social media, the brief says, as long as it is permitted by international treaties.
But that’s precisely the problem with using Twitter to serve an accused whose whereabouts are unknown, Brnovich said in a Dec. opinion denying the plaintiffs’ request for alternative service. Zhao, for example, could be in Taiwan or Singapore. Plaintiffs could notify him via Twitter if he is in Taiwan, which has not joined the Hague Convention, Brnovich said – but not if he is in Singapore, which is a signatory to the Hague Convention. Hague. Without knowing what country Zhao and his colleagues are in, the judge concluded, she cannot determine whether the service via Twitter would violate international law.
The judge acknowledged other cases in which courts have authorized the social media service. In 2013, a judge in the Federal District of New York allowed the Federal Trade Commission’s motion to serve accused robocalls in India via Facebook. In 2014, a federal district judge in Virginia ruled that the networking app WhosHere, Inc, could serve a Turkish defendant via posts on Facebook and LinkedIn. And in 2016, a federal magistrate judges in San Francisco permit the St. Francis Assisi association to use Twitter to serve a Kuwaiti national accused of financing a terrorist operation.
But in all of these cases, Brnovich wrote in Tuesday’s opinion, the plaintiffs knew the defendants’ country of residence. Judges evaluating plaintiffs’ claims for alternative service could determine whether the defendants’ country of origin allows the use of a notice via social media.
“Unlike those cases, the defendants here would 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 prohibited by an international agreement because the country of residence cannot be identified.”
I reached out to Zhao, He, and Lin – on Twitter, of course – but got no response. Goodwin Proctor, who represents the defendant companies, did not respond to an email query about plaintiffs’ allegations that Binance moved its headquarters to evade regulators.
Plaintiffs’ attorney Wendt de Davillier said he understood why the judge denied his motion, although he said it was frustrating that the law was taking a long time to catch up with technology. “Zhao is intentionally hiding where he is,” Wendt said. “Binance says they exist in the cloud. It would seem that a cloud service would be appropriate.
On Thursday, Brnovich granted the plaintiffs’ request for a 60-day extension to the deadline for serving Zhao, He and Lin with the class complaint. “We’ll find them and we’ll nail them down,” Wendt said. “There must be a way for us to overcome.”
The opinions expressed here are those of the author. Reuters News, in accordance with the Principles of Trust, is committed to integrity, independence and non-partisanship.
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