Wash Trading Bitcoin: How Bitfinex benefits from fraudulent trading


I recently read about your journalistic exploits in Nathaniel Popper’s Ny Times article, Warning signs shadow Bitfinex, a bitcoin Exchange With a Dodgy Record.

There are many questions with an opaque Crypto currency exchange incorporated in a Caribbean tax heaven, managing daily transaction’s around the world with its own currency with shady accounting practices. My understanding is that the difficulty in a common Jane Doe leveling legal action against Bitfinex is the company’s management going to great lengths to maintain it’s bankers anonymity, and to Jane Doe, making Bitfinex — seemingly inprosecutable.

In 1789, US Congress passed the Alien Tort Statute. Its intended effect was to be able to prosecute Pirates in American Civil courts whose crimes were committed in ungoverned territories. Unbelievably, this little known obscure statue had only two courts base jurisdiction on the statue from 1793 to 1980. Jurisprudential precedents under the Alien Tort Statute have since veered from their initial focus on human rights, as courts have been forced to answer the question whether or not corporations can held liable under the Alien Tort Statute, just like people. American Civil Courts initially balked at this interpretation. However, in 2011, the Seventh Circuit Court of Appeals, the Ninth Circuit Court of Appeals, and the D.C. Circuit Court of Appeals all ruled that corporate liability is possible under the statute. On April 17, 2013, in Kiobel v. Royal Dutch Petroleum Co., the U.S. Supreme Court issued a decision affirming the Second Circuit Court of Appeals but on different grounds, holding that the ATS did not create jurisdiction for a claim regarding conduct occurring outside the territory of the United States, leaving the question of corporate liability unresolved.

Relating this back to crypto currency and Bitfinex, I am not a lawyer, nor do I advocate any type of legal action. But I respect the determination, persistence and sheer intellectual gaul of contrarian lone prophets who dare speak truth to power. As a nascent crypto currency investor and curious legal scholar I simply intend to remark, that there is an interesting intersection between the Alien Tort Statute, Bitfinex and American Civil court’s inability to coalesce on whether or not corporate liability is encompassed under this law.

Keep up the excellent and interesting work.