United American Corp (UAC) has filed a strongly worded opposition to a March 27 motion to dismiss their antitrust lawsuit filed in connection with an alleged scheme by defendants Roger Ver, Bitmain, Jihan Wu and others to manipulate the digital currency market.
The lawsuit was originally brought by UAC on December 6, 2018, though the complaint has since been amended and resubmitted. The suit concerns what it calls “a scheme by a tight knit network of individuals and organisations to manipulate the cryptocurrency market for Bitcoin Cash.” It alleges that the scheme led to a global capitalization meltdown of more than $4 billion, causing irreparable harm to UAC and many other U.S. Bitcoin holders. The defendants include Bitcoin.com CEO Roger Ver, Bitmain and its cofounder Jihan Wu, the Kraken coin exchange and its CEO, and others.
The complaint was brought under section 1 of the Sherman Act, a U.S. antitrust law. It prohibits conspiracies that unreasonably restrain interstate of foreign trade.
In their March 27 motion to dismiss, the defendants argued that UAC’s complaint describes “nothing more than a routine, albeit contentious vote among software developers, users and enthusiasts regarding two proposed upgrades to the software behind the Bitcoin Cash cryptocurrency” and accused the plaintiff of failing to lay ‘even a skeletal foundation’ for an antitrust claim.
The defendants attacked the complaint on three grounds: that UAC has failed to allege an agreement between the defendants, let alone an unlawful antitrust conspiracy; that UAC has failed to allege that any defendant has imposed an unreasonable restraint on competition; and that UAC has no standing to bring an antitrust claim because it has failed to allege an antitrust injury or that it is the effective enforcer of the claim in this instance.
But UAC’s opposition, filed April 24, characterized the dismissal bid as the defendants proposing “alternative explanations for how they could have—unbeknownst to one another—acted in unison to dominate the temporary software upgrade, quickly implemented a new software version with checkpoints, and taken total control of the Bitcoin Cash network.”
“These explanations are too convenient and too implausible to form the basis for an early dismissal of the case,” it continued.
Regarding the defendant’s claim that they have failed to allege a conspiracy, UAC asserts that at this stage, the plaintiffs need only demonstrate that a conspiracy plausibly (as opposed to probably, the standard argued for by the defendants) occurred.
The opposition also asserts that regarding the establishment of an unreasonable restraint on competition, that they have alleged there was actual and potential harm to competition and that they have defined the geographic market and the product market in which the defendant has gained increasing power, as required by the Sherman Act.
Finally, the UAC argues it has antitrust standing because it has adequately alleged—as is required—that it has sustained an antitrust injury and that they are an effective enforcer of antitrust laws in this instance. The injury, the plaintiffs assert, is that the actions of the defendants precluded current transaction processors on the BCH blockchain from implementing new software to improve the quality of BCH, constituting an unlawful restraint. Their standing comes from the fact that UAC was a BCH transaction processor that invested over $4 million into that endeavour, and that the actions of the defendants reduced the value of UAC’s processing output to the point of irrelevance.
Responses to the plaintiff’s opposition to the motion to dismiss are due by May 1, after which a decision will be made by Magistrate Judge Chris McAliley as to whether the suit will proceed or not.
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