Chainalysis is facing a defamation lawsuit over claims it wrongfully identified a cryptocurrency project as the second-largest scam in its 2023 Crypto Crime Report.
The blockchain analytics firm is set to appear before the New York Supreme Court on 16 October 2024, to address the lawsuit filed this January.
In SGT time, the case will be heard shortly today.
The judge will review a motion to dismiss recently submitted by Chainalysis' legal team, as revealed in documents published on the legal site Trellis.
Exceptional Media Ltd., the company behind the YieldNodes blockchain investment project, has filed a $650 million defamation lawsuit against Chainalysis.
The suit claims that Chainalysis wrongly labelled YieldNodes as an "investment scam" in its reports, causing significant damage to the company's reputation and client relationships.
Exceptional Media is also alleging malicious intent, seeking substantial compensation for the impact on its business.
Per the Jan. 22, 2024, court filing:
“In or around the third week of January 2023, Plaintiff received a phone call from someone at Chainalysis, informing Plaintiff that Chainalysis had categorized Yieldnodes as a scam. The Chainalysis representative informed Plaintiff that Yieldnodes' categorization could be lifted, or changed to 'high-risk', but such a possibility should be viewed as an 'opportunity' that may take a couple of months.”
Back in January, YieldNodes stated on X (formerly known as Twitter) about prioritising "fairness and trust in all dealings.”
Since the initial filing, Chainalysis has submitted several motions to dismiss the defamation lawsuit.
The blockchain analytics firm argues that Exceptional Media and YieldNodes have not proven that the YieldNodes project is not a scam or adequately refuted the allegations.
In a court filing, Chainalysis stated that the complaint "fails to allege falsity," emphasizing that its report classified YieldNodes as an investment scam promising unrealistic returns based on an algorithmic trading strategy.
Above is the chart in question published by Chainalysis in 2022 alleging YieldNodes was the second-largest crypto scam by revenue for the year.
Chainalysis further contends that the plaintiff's inability to explain how the analysis was inaccurate suggests that YieldNodes may, in fact, be an investment scam.
The firm has also moved to dismiss the case on jurisdictional grounds, claiming the New York Supreme Court lacks authority over such commercial disputes.
If the case proceeds, it could set a precedent for increased scrutiny and transparency in blockchain surveillance.
The outcome of this legal battle may reshape accountability in the blockchain analytics industry—what will the court's decision reveal?
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