Chainalysis to appear in court over $650M defamation suit

Reported by Cointelegraph: The suit alleges Chainalysis falsely labeled the YieldNodes project a scam.

Legal representatives from blockchain analytics firm Chainalysis are scheduled to appear at a New York Supreme Court hearing on Oct. 16 regarding a defamation suit brought against the firm in January of 2024.

According to documents posted on the legal analysis site Trellis, the judge presiding over the case will weigh in on a recently filed motion to dismiss from the Chainalysis legal team.

YieldNode

Chainalysis is being sued by Exceptional Media Ltd., the company behind the YieldNodes blockchain investment project. According to legal documents filed by Exceptional Media, Chainalysis erroneously labeled its YieldNodes project an “investment scam.”

Exceptional Media seeks at least $650 million in damages, citing harm to its reputation and client base. It also alleges malicious intent.

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.”
Chainalysis’ response
In the time since the initial filing, Chainalysis’ legal team has filed numerous motions to dismiss. According to Chainalysis, Exceptional Media and YieldNodes failed to establish that the YieldNodes project isn’t a scam or to provide any refutation of Chainalysis’ allegations.

Per a court document filed by Chainalysis’ legal team, “the complaint fails to allege falsity.”

The filing goes on to state that Chainalysis’ report identified YieldNodes as an investment scam, “one that typically promises users outsized investment returns, often based on an algorithmic, ‘can’t lose’ trading strategy.” It further claims that the complaint’s failure to define how Chainalysis’ analysis was incorrect “suggests it is plausible that Yieldnodes is, in fact, an investment scam.”

Chainalysis has sought to dismiss the case on the grounds that “the Complaint’s failure to explain why it is not an investment scam (let alone a scam of any type) is fatal to Plaintiff’s claim.”

It also sought to have the case dismissed on the grounds that the New York Supreme Court doesn’t have jurisdiction over this type of civil, commercial disagreement.