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Dfinity Foundation Files Defamation Lawsuit Against The New

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NEW YORK, June 28, 2022 /PRNewswire/ — Dfinity Foundation today filed a lawsuit against The New York Times, Times reporters Andrew Ross Sorkin and Ephrat Livni, Arkham Intelligence, Inc, Arkham’s founder and Chief Executive Officer Miguel Morel, and other current or former Arkham officers, agents and employees, for defamation and unfair business and trade practices. It is expected that additional defendants will also be added to the lawsuit as the situation evolves.

The Dfinity Foundation is a Swiss not-for-profit organization, headquartered in Zürich, with additional research centers in California and remote teams around the world. It currently employs a team of more than 270 people, which consists primarily of senior engineers, research scientists, and cryptographers, many of whom are famous in their respective fields, and who have earned more than 86,000 research citations. The organization’s purpose is to advance technology that supports the “Internet Computer”, advocate for its wider use, and assist thousands of entrepreneurs and developers currently using the platform to build Web3 online services and decentralized applications (“dapps”), including next-generation social media, gaming and metaverse ventures, and millions of end users.

The Internet Computer is one of the most disruptive innovations in tech. It is a public compute platform that provides an open alternative to centralized traditional IT, such as Amazon Web Services cloud computing, server computers, databases and web servers. This compute platform is in fact an advanced blockchain, powered by revolutionary mathematics, that runs at web speed, with web-levels of efficiency, that is capable of processing almost any amount of data and computation. Using this open platform, entrepreneurs and developers can build almost anything exclusively using next-generation blockchain code (“smart contracts”) that directly serves interactive content to end users over the World Wide Web. The use and management of the blockchain network involves its ICP token, which enables participation in network governance, and produces fuel that powers computation. ICP tokens were made publicly available in February 2017, and became transferrable when the blockchain underwent “genesis” on May 10th, 2021 – whereupon the blockchain transitioned into full production mode and became part of the public internet.

The lawsuit alleges that wealthy and powerful individuals used the Times and the willingness of its star business reporter, Andrew Ross Sorkin, who together knowingly published, with actual malice, a false and defamatory story about a “hit piece” report (the “Arkham Report”) on June 28th 2021—a report that was secretly bought and paid for by wealthy elites who sought to personally profit from the scheme. As a direct result of the Times publishing the story, which relied upon and promoted the bought-and-paid-for Arkham hit piece, the scheme harmed the Internet Computer ecosystem’s operations and reputation. The lawsuit also alleges that the defamation scheme involves unfair business and trade practices, because it was motivated by a desire to reduce the threat that the Internet Computer poses to competitive blockchains. The lawsuit resulted from recent revelations made by Crypto Leaks (https://cryptoleaks.info).

According to the Dfinity Foundation’s Founder and Chief Scientist, Dominic Williams, who has been working on the Internet Computer for many years: “After the Internet Computer network underwent genesis May 10th last year, a large number of vicious attacks were directed towards us. Most of these were motivated by a desire to harm and undermine the Internet Computer’s ecosystem to reduce the threat it poses to competitive blockchains. One of the worst attacks was Arkham Intelligence’s hit piece report, which made many false and baseless claims, which I believe was carefully crafted to defame the project and cause maximum harm. Arkham was an unknown outfit, with no track record, which had never produced a report before, and has never produced a report since, which would have gone unnoticed had the New York Times not published and promoted it with malice. I am grateful for the Crypto Leaks case investigation that shed light on the real goings-on, which has spurred us to seek a remedy by pursuing the perpetrators. We at Dfinity will use all means to defend the Internet Computer, the thousands of entrepreneurs and developers building on the network, the end users of services and applications they build, and the incredible and brilliant teams of engineers, computer science researchers and cryptographers that work tirelessly on supporting technology.”

A copy of the lawsuit can be found here:  https://dfinity.org/complaint.pdf

The lawsuit was filed by renowned defamation and media attorney Charles Harder of Harder LLP.

According to the lawsuit:  
“This action shows how wealthy and powerful individuals specifically used the Times and the willingness of its star reporter, Andrew Ross Sorkin, to knowingly publish with actual malice, a false and defamatory story about a “hit piece” report (the “Arkham Report”)—a report that was secretly bought and paid for by the wealthy elites who sought to personally profit from the scheme. As a direct result of the Times, through its celebrity reporter Sorkin, publishing the story which relied solely on the false Arkham bought-and-paid for hit piece, the scheme worked and Dfinity suffered extraordinary damages.

“The Times Defendants’ actual malice in publishing the Arkham Report is demonstrated by a number of facts, including:

a. “Arkham is a self-proclaimed “crypto analysis” firm that has released only one single report—the Arkham Report—in the entire duration of its existence. Arkham and its purported founder and CEO, Morel, were previously completely unknown within the world of cryptocurrency analysis.

b. “Arkham’s Twitter account has a total of seven (7) tweets, the first one dated on June 28, 2021—all of them concern the Arkham Report.

c. “Like Morel, the other authors of the Arkham Report all appear to be in their 20’s with zero experience reporting on the blockchain industry, but many of whom have connections to Dfinity’s competitor, Reserve Protocol (“Reserve”).

d. “On information and belief, one of Arkham’s investors is a billionaire who has significant investments in competing crypto projects. On information and belief, the Times Defendants consciously disregarded that Arkham was paid by an as-yet- unidentified individual or individuals to produce the defamatory Arkham Report hit piece.

e. “Simply stated, even minimal journalistic diligence would have demonstrated that the Arkham Report was created for only one purpose: to cause reputational and financial damage to Dfinity and the Internet Computer Protocol.

f. “The article published in the Times does not include any facts relating to the unknown status and inexperience of Arkham, even though such information was surely known to Times reporters. Nor does the article contain any significant information about Arkham’s motives, or who was funding Arkham, even though the Times reporters surely had suspicions or obvious reasons to suspect such motives and funding.

g. “The Times Defendants decided not to disclose to Dfinity the existence or contents of the Arkham Report when it sought comment from Dfinity on the Sunday night before the article was published the next day on Monday, June 28, 2021.

h. “Before publication, Dfinity provided detailed information to the Times refuting key aspects of the article. Rather than take the time to investigate the claims made by Dfinity to determine whether the article could still be published or would need to be substantially modified or spiked, the Times Defendants went ahead and published the article based on the defamatory Arkham Report, complete with false statements of fact, the next day. In maliciously publishing the article, the Times Defendants knew that the article would have an immediate, negative impact on the infancy of the decentralized Web3 technology that Dfinity is pioneering. And, in fact, that is precisely what happened as alleged herein.

“Despite what clearly was almost no due diligence into Arkham, the Article cites Arkham’s CEO Morel and the Arkham Report as its primary sources… The Article relies on Morel and Arkham even though both were completely previously unknown in the crypto industry and plainly unreliable sources with ulterior motives.

“Notably, the Arkham Report itself states that Morel is the co-founder of Reserve. The Article states this important fact in passing but does not mention that as of the date of publication of the Arkham Report and the Article, Reserve was a wannabe competitor of Dfinity in the cryptocurrency industry or the inherent unreliability of a competitor’s statements about another crypto company. Nor does the Times mention the fact that Arkham has, as its “angel” investor, a noted billionaire investor in other crypto projects—or that an undisclosed third party paid to commission the defamatory Arkham Report. And of course, the Article does not mention that Arkham had no previous existence covering the crypto industry, or any of the other dubious facts about the Arkham Defendants, their lack of experience and qualifications, and malicious ulterior motives in attacking and defaming Dfinity.

“(I)t can be reasonably inferred that Arkham was founded and capitalized for only one purpose, to cause reputational damage to Dfinity and its investors. Simply stated, there is no way that the Arkham Defendants, acting alone, could have gotten access to Sorkin, let alone coordinated this scheme and convinced Sorkin and his editors to publish the Article based on the intentionally false facts contained in the bought-and-paid for Arkham Report.

“In June 2022, online investigative video footage posted on Crypto Leaks shows Arkham representatives admitting that Arkham was in fact hired and paid a significant sum by a wealthy individual to create the Arkham Report. On information and belief, this wealthy individual has investments in the cryptocurrency space that are competitive with Dfinity, and paid Arkham and Morel to create the Arkham Report, knowing that the report would make false and defamatory statements about Dfinity therein, and with the intent and purpose that the report and statements would be shared with Sorkin and Livni at the Times and republished in an article, to provide instant legitimacy to and bolster the Arkham Report’s supposed reliability, and publicize throughout the world the false and highly damaging statements in the Arkham Report.

“In a taped interview available at Crypto Leaks, Nick Longo of Arkham, when asked if Arkham has an ‘angel’, responds in the affirmative, naming a billionaire crypto investor.2

“On information and belief, Defendants carried out their malicious actions—simply put, a coordinated hit job—to intentionally harm Dfinity and its reputation, interfere with its business dealings and relationships, including to gain a competitive advantage for the Arkham Defendants and their financier(s) in the cryptocurrency industry, and potentially bankrupt Dfinity in the process. On information and belief, the named Arkham Defendants and their sponsors also profited in additional ways from their actions.  or reputations for their alleged expertise or any legitimate basis for their supposed and very serious “findings” about Dfinity and ICP.

“The Times Defendants doubted or had obvious reasons to doubt the veracity of their sources and the sources’ claims about Dfinity. Nevertheless, on the very same day the Arkham Report was released, the Times Defendants, without any serious investigation into the backgrounds, ulterior motives, and obvious conflicts of interest of the Arkham Defendants, and also without investigating the truth or falsity of the claims contained in the Arkham Report, even though it would naturally cause tremendous reputational and economic harm to Dfinity, published and repeated the false and defamatory statements about Dfinity contained in the Arkham Report. The Times Defendants purposefully avoided investigation or further investigation, with an intent to avoid the truth. Any “investigation” by the Times Defendants was deliberately skewed to avoid uncovering the truth—or, worse yet, simply ignored the truth.

“The fact that Sorkin, who writes about the influence the uber-wealthy has on the media,3 and Livni (a lawyer), conducted no diligence on their primary (and apparently only) source for the Article is alarming and strongly suggests undue influence by a third party, causing these seasoned reporters to ignore the Times‘ own standards for reporting and ethics. Dfinity finds it highly suspicious that a company with no track record (Arkham) and an individual with limited work experience (Morel) managed to convince veteran Times reporters to base an entire story on a dubious paid-for report that made unsubstantiated and defamatory allegations unless the Times reporters were unduly influenced by a third party with direct access to the reporters. Dfinity believes discovery will reveal that Sorkin and/or Livni were unduly influenced by an uber-wealthy and influential third party to be an accomplice in this coordinated hit job along with Arkham and its financier(s) (competitors to Dfinity who, on information and belief, also used their inside and advanced knowledge that Sorkin and the Times would maliciously publish the Article based on the Arkham Report to personally profit in additional ways) to cause substantial damage to Dfinity’s business and reputation.

“In June 2022, online investigative video footage posted on Crypto Leaks shows Arkham representatives admitting that Arkham was in fact hired and paid a significant sum by a wealthy individual to create the Arkham Report. On information and belief, this wealthy individual has investments in the cryptocurrency space that are competitive with Dfinity, and paid Arkham and Morel to create the Arkham Report, knowing that the report would make false and defamatory statements about Dfinity therein, and with the intent and purpose that the report and statements would be shared with Sorkin and Livni at the Times and republished in an article, to provide instant legitimacy to and bolster the Arkham Report’s supposed reliability, and publicize throughout the world the false and highly damaging statements in the Arkham Report.

“In a taped interview available at Crypto Leaks, Nick Longo of Arkham, when asked if Arkham has an “angel”, responds in the affirmative, naming a billionaire crypto investor.2 On information and belief, Defendants carried out their malicious actions—simply put, a coordinated hit job—to intentionally harm Dfinity and its reputation, interfere with its business dealings and relationships, including to gain a competitive advantage for the Arkham Defendants and their financier(s) in the cryptocurrency industry, and potentially bankrupt Dfinity in the process. On information and belief, the named Arkham Defendants and their sponsors also profited in additional ways from their actions to further his second career in the content creation industry.

1 https://cryptoleaks.info/case-no-2  
2 https://cryptoleaks.info/case-no-2

“Defendants’ false and defamatory statements and tortious conduct have caused, and will continue to cause, extraordinary damages to Dfinity and the Internet Computer Protocol. Defendants must be held accountable for the harm they foreseeably caused Dfinity and the Internet Computer Protocol by their defamatory statements made with actual malice and their tortious conduct.”

A copy of the lawsuit can be found here:  https://dfinity.org/complaint.pdf

SOURCE Dfinity Foundation