From Monday’s decision in Harborne v. Dow Jones & Co., by Judge Kathleen Miller (Del. Super. Ct.); the opinion is over 9000 words long, so here are just a few excerpts:
Christopher Harborne (“Harborne”) is an international businessman, owning and investing in several successful businesses. He was an early investor in cryptocurrency, and became an active trader on the Bitfinex cryptocurrency exchange. While Harborne owned 12% of Bitfinex and its sister company Tether, he was not involved with either company, except as a minority stakeholder.
The Wall Street Journal (“Journal”) published an article in 2023 about Bitfinex’s and Tether’s difficulties maintaining access to the global banking system in light of fraud and money laundering allegations. The article detailed how these companies used falsified documents, “shadowy intermediaries,” and shell companies to open bank accounts around the world, including at Signature Bank. Signature Bank ultimately closed the accounts and later attempts by Tether and Bitfinex to open new accounts were rejected, due to the allegations against them.
The article then turned to Harborne, reporting that after Tether and Bitfinex were turned down by Signature Bank, the bank was “then introduced” to Harborne and his company AML Global. The article stated that Harborne opened an account for his company at Signature Bank, but the application did not say that he owned 12% of each of Bitfinex and Tether under the name Chakrit Sakunkrit. {[According to the Complaint, Harborne] holds dual citizenship in Great [Britain] and Thailand, where he has lived and worked for over 20 years. When he became a naturalized Thai citizen, Harborne was required to adopt a Thai name. He chose Chakrit Sakunkrit. He uses his Thai name for legal purposes in Thailand and uses his birth-name outside Thailand.}
The article also stated that the Sakunkrit name appeared on Signature Bank’s list of those the bank felt “were trying to evade anti-money laundering controls.” The article described Signature Bank executives questioning the source of funds into AML Global’s account. The bank then “soon closed” the account.
Harborne and his companies sued for defamation, and the court concluded that Harborne had adequately alleged the article falsely accused him of financial improprieties:
The title of the March Article previews its theme: Companies Connected to Tether Used False Documents and Shell Companies to Obtain Bank Accounts. The article referred to “shell companies” and “shadowy intermediaries” that were used to fraudulently open the accounts. It also discussed investigations into Tether and Bitfinex transactions and other fraud in the cryptocurrency market (referencing Sam Bankman-Fried being charged with fraud). After recounting that Tether’s and Bitfinex’s accounts were closed and their later efforts to open an account at Signature Bank were “rejected,” the article stated that the bankers “were then introduced to” AML about opening an account.
Reading the March Article as a whole, as the Court must, the “gist” is that Harborne and his company were part of this larger scheme to defraud banks. The article insinuates that Harborne intentionally hid from the bank his Thai name and his ownership interest in Tether and Bitfinex….
The complaint alleges that Harborne followed Standard Bank’s application process, provided the bank with all the information requested, including voluntarily disclosing his Thai name, and offered to provide more information if needed. Further, the Signature Bank account was used only for the stated purpose—to trade Kraken. And, the bank did not act in a manner consistent with a concern about bank fraud; it opened the account and allowed Harborne to continue to use it for a month after issuing the account closure notice. Accepting Dow Jones’ argument (that Signature Bank closing the account without explanation only a few months after it was opened shows it was concerned about fraud), would require construing the allegations in Dow Jones’ favor, which the Court cannot do on a motion to dismiss….
Plaintiffs also alleges facts that AML was not a shell and that Harborne was not an executive of Bitfinex or Tether.
Finally, Dow Jones’ assertion that the gist of the statement that Harborne’s Thai name was put on the bank’s list was simply due to Harborne’s connections to Bitfinex (and not because of any alleged wrongdoing), is not a reasonable reading of the March Article. The article expressly said that the Sakunkrit name was put on the list due to concerns over money-laundering.
The Court finds that the effect of the March Article on the ordinary reader would be that Harborne and his companies were involved in the fraudulent schemes. The complaint alleges facts sufficient to plead that the article was false.
And the court concludes that the complaint adequately alleges “actual malice,” i.e., that defendants knew the statement was false or at least likely false:
Direct evidence: Plaintiffs allege that the March Article insinuated that Harborne hid his Thai name from Signature Bank, but the Journal possessed Signature Bank documents that showed that the Thai name was disclosed. Also, the Journal knew from previous reporting that AML was a jet fuel company with significant contracts, not a shell. Dow Jones responds that the March Article never called AML a “shell” company. But a fair reading at this stage is that the article suggested that AML was a shell.
Preconceived narrative: The throughline of the March Article was Bitfinex’s and Tether’s scheme to defraud banks. The Journal sought to further that narrative by implicating Harborne. The reporters contacted Bennett, but did not follow through after Bennett indicated that his information would not be helpful to the story the Journal wanted to tell.
Despite no Bitfinex transactions in AML Global Payment’s Signature Bank account, the March Article included a quote from “[c]ompliance executives” suggesting that Bitfinex transactions had been flowing through the account.
To “fit” Harborne into Bitfinex’s scheme, the article stated that “Harborne is one of Bitfinex’s largest shareholders,” despite the fact that he had no control over the company and never held any positions with the company.
Refusal to retract: While the Journal removed the Last Five Paragraphs of the article from its online version, its other sites still carry the full article.
Departure from Journalistic standards: The Journal admitted that the March Article was not up to its editorial standards….
Again, recall that at this stage the question is just whether plaintiff had adequately alleged falsity and “actual malice”; plaintiff has not yet had an opportunity to prove that the statements were indeed false (and knowingly or recklessly false).
Libby Locke (Clare Locke LLP) argued on behalf of plaintiff, who is also represented by Jered Ede (Clare Locke LLP) and Brian Farnan and Michael Farnan (Farnan LLP).
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