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Roche Cyrulnik Takes Lead In $1.4T Bitcoin Manipulation Suit

August 16, 2022

Law360 (February 27, 2020, 9:50 PM EST) — Roche Cyrulnik Freedman LLP confirmed Thursday that a New York federal judge has appointed it interim lead counsel in a bitcoin market manipulation case against Bitfinex and Tether that could be worth up to $1.4 trillion in damages. U.S. District Judge Katherine Failla picked the recently launched firm from two other sets of legal teams vying for lead plaintiff appointment in the putative class action accusing Tether, the issuer of a “stablecoin” cryptocurrency of the same name, and cryptocurrency exchange Bitfinex of engaging in a “part-fraud, part-pump-and-dump, and part-money laundering” scheme that eventually cost cryptocurrency investors hundreds of billions of dollars. Though the order was not publicly available on Thursday evening, Tether likewise confirmed that an appointment had been made in a statement in which Stuart Hoegner, general counsel for Tether, said the three legal teams competing for lead plaintiff appointment convened for oral arguments on the matter Monday and spent the duration “poking huge holes in each others’ legal theories and evidentiary footing.” “Whoever serves as lead interim counsel is irrelevant,” Hoegner said. Four lawsuits filed over the alleged manipulation were consolidated on Jan. 27, the first of which was filed last October by Roche Cyrulnik-represented cryptocurrency investor David Leibowitz, who called the three subsequently filed complaints “copycat actions” in response to two competing bids for interim lead counsel appointment. Leibowitz is also represented by Schneider Wallace Cottrell Konecky LLP and Selendy & Gay PLLC. One of those competitors was Eric Young, who filed a similar case in Washington federal court in November and contended that his counsel at Kirby McInerney LLP and the Radice Law Firm had already undergone a deeper analysis of the claims than other firms seeking the appointment. Investor Joseph Ebanks had sought the appointment for Robbins Geller Rudman & Dowd LLP, arguing that he is only interested in representing actual purchasers of bitcoin rather than “tertiary victims,” such as purchasers of bitcoin futures, who “may not have suffered collateral damage from defendants’ scheme for their own market-specific reasons.” The now-consolidated suits rely on the findings in a university professor’s unpublished report, first made public in June 2018 and updated on Oct. 3, that concluded Tether and Bitfinex had coordinated to manipulate the price of bitcoin. The investors allege that billions of tether tokens issued by Tether between 2017 and 2018 were used to flood the Bitfinex exchange and buy up other cryptocurrencies. Because the market was led to believe tethers were fully backed by U.S. dollars, the demand and prices for cryptocurrencies spiked, creating a bubble that ultimately wiped out $450 billion in value when it burst, the suit alleges. Bitfinex, Tether and others named in the complaint could be liable for more than $1.4 trillion if damages are tripled as required by the Racketeer Influenced and Corrupt Organizations Act and antitrust statutes, the investors say. In Tether’s statement on Thursday, Hoegner said the “now amalgamated copycat lawsuits” remain baseless and rely on a flawed report that lacks data and evidence to support the litigation’s “incendiary allegations.” “This academic sloppiness and lack of evidence means that plaintiffs’ counsel can’t establish a valid sequence of events through which their allegations of manipulation could have occurred,” Hoegner said. “Sadly, the claims are nothing more than a shameless money grab.” The three sets of lead counsel contenders did not immediately respond to requests for comment Thursday. Leibowitz is represented by Kyle W. Roche, Devin “Velvel” Freedman, Jason C. Cyrulnik, Amos E. Friedland, Edward J. Normand and Joseph M. Delich of Roche Cyrulnik Freedman LLP, Todd M. Schneider, Jason H. Kim, Matthew S. Weiler and Kyle G. Bates of Schneider Wallace Cottrell Konecky Wotkyns LLP and Philippe Selendy, Caitlin Halligan, Maria Ginzburg and Andrew Dunlap of Selendy & Gay PLLC. Young is represented by David E. Kovel, Karen M. Lerner, Thomas W. Elrod and Anthony E. Maneiro of Kirby McInerney LLP and John Radice of the Radice Law Firm PC. Ebanks is represented by Samuel Howard Rudman and Brian E. Cochran of Robbins Geller Rudman & Dowd LLP. Tether and Bitfinex are represented by James Walden, Daniel A. Cohen, Stephanie T. Levick of Walden Macht & Haran LLP, Michael J. Lee of the Law Office of Michael J. Lee and Sunjina Ahuja and Christopher Beal of Dillon Miller Ahuja LLP. The consolidated case is Leibowitz et al. v. iFinex Inc. et al., case number 1:19-cv-09236, in the U.S. District Court for the Southern District of New York. By Dean Seal Law360 (February 27, 2020, 9:50 PM EST) –Additional reporting by Philip Rosenstein. Editing by Emily Kokoll. Source: