Binance CEO demands discovery of Bloomberg LP via special US law

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Zhao Changpeng, founder and CEO of Binance, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France, June 16, 2022. REUTERS/Benoit Tessier/File Photo

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(Reuters) – If you handle complex international cases and don’t systematically strategize on how to take advantage of a U.S. law that allows litigants to sue U.S. courts for a discovery related to foreign litigation, you’re probably not doing everything you can for your customers.

The law, Section 1782 of Title 28 of the United States Code, allows parties engaged in foreign litigation to ask federal judges to authorize discovery related to their foreign claims. You probably remember that the United States Supreme Court closed the door last month on the 1782 discovery in a private commercial arbitration. But the Supreme Court’s decision only restricts claims for the 1782 discovery in foreign arbitration, leaving participants in foreign litigation free to turn to U.S. courts with discovery claims.

Let them be, and en masse, said Lucas Bento of Quinn Emanuel Urquhart & Sullivan, the author of a 2019 treatise on the 1782 discovery. increased by 500%. Each year, he said, brings more discovery requests than the last — and each month, Bento said, he spots new decisions from US judges on 1,782 requests.

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“It’s a huge boom,” said Bento, who is working on an update to his book on the globalization of discovery in 1782.

The final evidence of the surge in discovery claims in 1782 is a Petition of July 25 in Manhattan federal court of Changpeng “CZ” Zhao, CEO of cryptocurrency exchange Binance Holdings Limited. Zhao seeks documents and depositions from Bloomberg LP and Bloomberg Inc.

Zhao lawyers at Sidley Austin argue in new Manhattan federal court filing that Binance founder needs evidence from Bloomberg to prosecute his case. defamation lawsuit in Hong Kong against Modern Media Company Limited, a Hong Kong-listed company that is licensed to publish Chinese-language versions of Bloomberg content, including articles from Bloomberg Businessweek magazine.

No Bloomberg entity is named as a defendant in the Hong Kong lawsuit, and Zhao did not sue Bloomberg in the United States, although he claimed in his 1782 petition that a June 23 Bloomberg Businessweek profile of him “contained several serious and defamatory allegations made against Zhao and Binance that were completely unfounded.

A Bloomberg News spokesperson said in an emailed statement Tuesday that the company would not comment on Zhao’s 1782 petition. Modern Media lawyers at Yuen & Partner’s in Hong Kong did not immediately respond to an email query.

Bloomberg is a competitor to Thomson Reuters for news and information services.

Zhao alleges in the Hong Kong lawsuit that Modern Media defamed him by publishing and promoting a translated version of the Bloomberg Businessweek profile. The July 6 Chinese article was titled “Zhao Changpeng’s Ponzi scheme.” (The Bloomberg Businessweek story ran with a different title, “Can Crypto’s Richest Man Stand the Cold?”)

Bloomberg also sent me a general statement on the Zhao dispute in an email on Tuesday. “We understand that Binance has filed a lawsuit against Modern Media, a China-based company that publishes a Chinese-language edition of Bloomberg Businessweek and published a translated version of a Businessweek article that was first published. times on June 23,” Bloomberg’s statement read. “The lawsuit refers to a title that was not published in the original English version of the story.”

After Zhao’s lawyers complained to Modern Media about the “Ponzi scheme” headline and other allegedly defamatory statements in Zhao’s article, Modern Media recalled physical copies of the magazine that had been circulating in Hong Kong and removed social media posts that included the headline “Ponzi”. , although the Chinese company has not acknowledged any wrongdoing.

Zhao, who alleges the article contains additional defamatory statements, is asking in the Hong Kong lawsuit for a complete retraction of the modern media version of the story, as well as the publication of a corrective statement or apology.

Zhao stated in his 1782 petition that he was entitled under this law to a discovery that would shed light on Bloomberg’s relationship with Modern Media; Bloomberg’s control over the republication of its content by Modern Media; and Bloomberg’s role, if any, in Modern Media’s response to Zhao’s correction and retraction requests.

I was intrigued by Zhao’s assertion in his 1782 record that the original story, and not just the modern media translation, contained defamatory statements. I asked Binance spokesperson Aidan Ryan if Zhao could potentially use any discovery he gets from Bloomberg through the 1782 action in a subsequent U.S. lawsuit against Bloomberg. “CZ is focused on litigation against Modern Media in Hong Kong,” Ryan said.

Generally speaking, according to 1782 expert Bento, some litigants try to use these petitions not just to gain discovery, but for some sort of tactical or strategic advantage. I told you last month, for example, about a congressional committee that accused Washington Commanders owner Dan Snyder of “abusing” the law, seeking to be discovered via 1782 by suspected opponents of the United States based on an allegedly unrelated defamation lawsuit in India. Snyder’s attorney for Reed Smith vehemently denied any misuse of 1782, insisting that Snyder and his attorneys were only looking for evidence related to the Indian litigation.

Bento said federal judges have become increasingly sophisticated about 1,782 motions as these discovery requests have proliferated. The 1782 litigation has become much more complex, Bento said, with opposing parties to the underlying foreign litigation now often appearing as intervenors to oppose third-party discovery claims.

Sometimes, Bento said, courts end up dismissing inappropriate motions. Or judges can impose protective orders to restrict use of the discovery obtained via 1782 motions, Quinn’s attorney said. In the Zhao case, for example, Zhao’s attorneys from Sidley said in their brief that Zhao would be open to a protective order if Bloomberg was concerned about controlling access to confidential information.

As litigation becomes more international, creative lawyers are going to be drawn into litigation more often on 1782 petitions. If you’re not careful, you should be.

Read more:

Did NFL team owner Dan Snyder abuse a discovery law? The House committee says yes.

Gibson Dunn accuses King & Spalding of corruption cases in Mongolia

Special Report: How Crypto Giant Binance Became a Hub for Hackers, Fraudsters and Drug Dealers

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