Steem Theft Lawsuit: Bittrex is not Happy!
the-steem-community-launched-a-lawsuit-against-bittrex
Key members of the Steem community have launched a lawsuit against crypto exchange Bittrex—which unexpectedly received over $5 million of cryptocurrency that the Steem community alleges was stolen from them—to get their funds back. The plaintiffs are asking the exchange to pay $16 million.
Interesting...
That clearly implies that Bittrex would lose $11M right?
Seems like a dick move :D
Especially considering Bittrex was the first exchange to pull Hive out of the potential dumper of obscurity it may had fallen into had we not got any exchange listings. Eh that's the way the cookie crumbles I guess.
Suck it, Bittrex!
It was filed by Daniel Notestein, Daniel Hensley and others, who lost $3 million—60% of the seized money—when it was taken.
Bittrex responded to the complaint on July 15. The crypto exchange acknowledged that it had received the Steem tokens but denied many of the claims in the original complaint, asking for the lawsuit to be dismissed. One of its defenses was that the damages, or lost funds, were not caused by Bittrex itself—and that it should not be held responsible for the money.
Sure sure, fair enough.
The exchange further stated that the person who sent them the money “did not provide an identifying memorandum or any other information purporting to identify these ‘original owners’.”
lol
Sometimes when you play dumb, it makes you look dumb as well, Bittrex.
Yesterday, the Steem community members responded in a filing that claimed Bittrex is not justified in believing that an unknown party may have stolen the funds. The Plaintiffs pointed to the accompanying message Bittrex received when it was passed the funds: “These are funds stolen by the Steem witnesses using HF23 May 20th 2020 - please return them to their original owners prior to the fork :).”
Hm, yeah... duh.
Also it's pretty easy to provide astronomical evidence to show that Steemit Inc had and still has unilateral control of all 20 witnesses and is now operating an unregulated security that steals funds from investors... but who's counting at this point?
Bittrex had also expressed concerns about paying the cryptocurrency into the court. The plaintiffs claimed that the exchange could create a sub-account within the Bittrex account and store it there. They expressed concern that if the money was put together in one account (rather than stored in Bittrex’s larger pool of exchange funds) and sent to the court, then it could be seized yet again.
Honestly that would be pretty hilarious.
Imagine if the top 20 Steem witnesses (aka puppetmaster JSun) had the fucking audacity to steal money from a pending court case account on the blockchain. Honestly if it were up to me I'd consider making this play just to BAIT him into taking it. Since when has Justin Sun ever backed down and not escalated the fight? It's almost guaranteed that he would. I wonder if we could use that against him.
Of course I'd never make that play if I actually had a significant amount of stake to lose, so I could never expect such a thing to happen.
So yeah this is a really short article... I basically quoted the entire thing. Still, it brings up a lot of interesting questions. For starters, why risk being greedy?
Why are we asking Bittrex for $11M worth of damages when no damages were caused by Bittrex? I mean, sure, by not acting and forcing this lawsuit to happen... that is pretty annoying. But can you really expect them to act and just send the money to the supposed associated Bittrex accounts that correlate to the Steem accounts that were stolen from?
Let's not forget, there's even an argument to be made (however weak) that no theft even occurred in the first place. I dun know... seems like a slippery slope for them. Seriously though, what a nightmare for their lawyers. Worst situation ever.
Seriously though, what do we expect them to do?
If they give the money back to the rightful owners they might get just get sued by the other side. Fun stuff for them. Of course that might be awesome because then the other side would have to officially identify themselves, opening another can of worms.
All they can do at this point is fight the lawsuit or settle if they can't get it dismissed. I hope asking for that extra $11M doesn't help the lawsuit get dismissed... that would be disappointing to say the least... although even in that case what are they going to do with the money? That situation just opens up more questions than answers.
Setting legal precedence.
What kind of legal precedence could a case like this set for the future? Will this case set the standard for other similar ones that come later? Will some sneaky lawyer be able to manipulate what is being done here to apply these rules to a case that doesn't even necessarily fit the same variables?
I'm not even going to speculate on that, but I would be interested to hear what our resident lawyer @apshamilton has to say about any part of this situation. If you haven't already, check out his class action lawsuit against big tech for stifling crypto advertising. He is a great ally to the entire cryptosphere.
What happens if the plaintiffs we win?
I hope @theycallmedan uses his pro poker skills to employ a measured response to an assumed victory. Same goes to @blocktrades and whoever else. As fun as it would be to watch Steem flash crash I think we could do a lot more sustained damage by cost-average selling over a long period of time.
On the one side it would be risky to hold Steem coins (even on Bittrex) for any amount of time longer than necessary. We all know that Sun's plan was and probably still is to absorb the network directly into Tron. In addition, a flash crash would look really bad for JSun, Tron, and Steem, which for some would look like a win for Hive (not sure if I agree on that front). Regardless, everyone loves a good revenge story.
There's also the mind-state of the investors who had their funds stolen to consider. Many of them likely have made some measure of peace that those coins are lost forever. Suddenly having them back in the pocket could feel like "free money", which is often treated much differently than money you worked very hard to attain. Just try playing poker against people during a freeroll vs a $100 buyin tournament and you'll see what I mean. People will go all in with 72 on a freeroll; they don't care.
On the other side of things is the tactical measured response. If the money could somehow be acquired before a bull run it's possible that these funds could be used to suppress the price of Steem during said bull run, or even make some pretty sick gains at the peak of it using nothing but what many of these investors consider an obsolete shitcoin at this point. Truly, there are arguments to be made on both sides.
Still measuring everything in USD.
You'll notice that even in an article detailing a lawsuit... the actual amount of currency reportedly stolen is not even given. Hilarious.
IIRC it was ~26M STEEM, not $5M
To assume 26M Steem is actually worth $5M is foolhardy considering liquidity. But you never know, maybe the price will spike and it will be worth more than that! Perhaps one day people will stop measuring everything in the PetroDollar. Probably have to wait for its collapse though. Or at least high levels of inflation (20%+ a year).
Steem still mirroring Hive
Have you noticed that whenever Hive changes in price Steem still continues to mirror it? Coincidence? Hardly. Truly, this feels like a matter of honor and saving face. When Hive price dips, JSun feels the noose loosen a bit and sells off some of the stack. When it goes up he pumps money back in. All speculation of course... but the movements are just so damn suspect, wouldn't you agree?
You really have to wonder what the price movements would be like considering the outcome of a case like this. With so little liquidity in both directions, I'd have to assume no matter what happens we're bound to see some fireworks eventually. Save some popcorn for the occasion.
Bittrex getting railed by KYC
Let's not forget our very own @jrcornel recently got slapped with an absolutely outrageous Source of Funds requirement. Seriously, if you don't know what I'm talking about look it up. The data they demand is absolutely offensive. Maybe Bittrex deserves what they get. Just sayin'.
Or maybe they're just under the thumb of the SEC and shit rolls down hill. I don't know things.
Conclusion
I have no idea how long we can expect a lawsuit like this to last. I assume the timing is variable depending on dozens of facets. Regardless of the timing, all legal proceedings feel like a slow-burn to those involved. It will be interesting to see how this one pans out. Best of luck, Hive FAM!
