Saturday, March 30, 2024
Friday, March 29, 2024
Tornado Cash Roman Storm Moves to Suppress and Compel Disclosure of Dutch MLATs
by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, March 29 – Roman Storm is charged using his cryptocurrency mixed Tornado Cash to help launder money for North Korea's hackers in the Lazarus Group.
On September 6, 2023 he was arraigned before U.S. District Court for the Southern District of New York Judge Katherine Polk Failla. Inner City Press was there - thread:
Cash helped North Korea's hackers Lazarus Group...There will be discovery from GitHub
On December 5, Judge Failla docketed the trial schedule: "SCHEDULING ORDER as to Roman Storm, Roman Semenov. It is hereby ORDERED that the following trial schedule will be in effect: Trial will be set to begin on September 23, 2024, at 9:00 a.m." Full scheduling order on Patreon here
On March 29, 2024, Storm through counsel submitted motions to suppress and to compel discovery, including into MLATs with The Netherlands, and FinCEN and OFAC communications. Memo/motion on Patreon here
The case is US v. Storm, et al., 23-cr-430 (Failla)
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Terraform Labs Crypto Trial Day 5 Has Victim Pharmacist Flown in From Cali Sued OK Coin
by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, March 29 – The SEC's trial against Terraform Labs began on March 25. Inner City Press was there, thread. On November 17, 2023 US District Court for the Southern District of New York Judge Jed S. Rakoff held a hearing on potential trial experts. Inner City Press live tweeted that too, thread.
From March 27, Day 3, thread
From March 29, Day 5, thread
Jury entering! Judge Rakoff: Juror 8 is really well dressed today [some laughter in the courtroom] Proceed. [Deposition of Paul Kim is being read / acted for the jury]
Witness who left Jump Crypto Terraform's lawyer: Do you have any personal information about the deals between Terra & Jump Crypto? Witness: Only about UST adoption. Terra's lawyer: You talked about trading during the depeg - but you were not a trader? W: I was not
h Terra's lawyer: You don't know what the book stacker is, right? Witness: I recognize the name. It's a trading system. Layering the book on the exchange, that's where the name comes from. Terra's lawyer: You never reviewed trades? W: I saw the notifications
Witness: The traders were in the Slack, I saw the notifications there. Terra's lawyer: You understand that prior to the restoration of the peg, Jump was market-making for UST, right? Witness: That's my understanding. Judge Rakoff: How much more to you have?
Do Kwon's lawyer: We have about two questions. Judge Rakoff: Alright. Terra's lawyer: Chris Drew was on the team? Witness: I don't recognize that name.
Terra's lawyer: Have you told Mr. Han about your whistleblower report? SEC: Objection! Judge: SustainedTerra's lawyer: Was any of the trading that you reported in your report done by Mr. Han? SEC: Objection. No foundation. Judge Rakoff: Sustained.
Terra's lawyer: Did Mr. Han find out about your whistleblower report?
Witness: Yes when your lawfirm published my name
Witness: While I was still at Jump we were receiving the one million Luna a month. Terra's lawyer: You don't know if that had been paid even before May 2021? SEC: Objection! Judge: Rakoff.
Terra's lawyer: You don't have any notes, do you? Witness: If I took notes I would have emailed them to myself, so they'd be on a Jump server somewhere. Terra's lawyer: Is the reason that Jump did not invest in Monad that Jump was no longer a VC? Witness: No.
Lawyer for Do Kwon: You said you didn't report your concerns about the depeg because of pushback? Witness: Yes. Lawyer for Do Kwon: Any other examples? Witness: Yes. Project Nebula. Lawyer for Do Kwon: But that wasn't about the depeg? Witness: No. No further Qs
[After a sidebar, Judge Rakoff returns and calls a break]
Back in SEC v. Terraform Labs trial - SEC is putting on an expert in "digital forensics", won't even get to cross examination today - but there *may* be another less scripted witness
Expert: The LP server just sent to the Chai wallets, then back to the LP wallets. Judge Rakoff: Ladies and gentlemen, we'll break with this witness here because we have another witness in from California who can only be here today, should only taken half an hour.Witness is a pharmacist from California. Witness: I learned of Do Kwon, I looked for a stable coin and came to UST.
SEC lawyer: How did you learn of UST? Witness: Articles online, YouTube videos. SEC lawyer: What did you hear? Witness: It was pegged to the dollar
Witness: It promised 20% annual return. I took out a $400,000 loan, bought UST and put it in the Anchor protocol. I looked at my investment every day. SEC lawyer: What happened next? Witness: May 9, I started getting notification that there was a de-peg.
Witness: Do Kwon tweeted, Steady, lads and that he was working to restore the peg. SEC lawyer: What is this? Witness: That's the tweet. SEC lawyer: How much of your $400,000 do you have left? Witness: Only $28,000
Cross examination: Defense: You sued OK Coin, right? SEC: Objection! Judge: Overruled Witness: Yes. Defense: And you said they misled you about UST? Witness: Yes
Judge Rakoff: I see Juror 5 looking at her watch (laughter) You may go for the weekend.
More on Substack here
The case is Securities and Exchange Commission v. Terraform Labs Pte Ltd. et al., 23-cv-1346 (Rakoff)
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Stock Fraudster Craig Auringer Freed in SDNY Now Bauer for Jewelry and Florida House
by Matthew Russell Lee, Patreon Book Substack
SDNY EXCLUSIVE, March 29 – Craig Auringer who was indicted for a $100 million pump-and-dump stock fraud was extradited in from Milan and immediately released on his own signature, an ICE detainer that was mentioned suddenly disappearing.
Inner City Press was the only media there and live tweeted:
Craig Auringer was set to be presented here in SDNY Magistrates Court and argue for bail- but there's an ICE detainer. Now his lawyers are trying to make it go away. There's still a lot of rushing around about the ICE detainer - which Team Auringer seemed to be disbelieving or denying the existence of
DOJ previously said (no word on today's ICE detainer) that CRAIG AURINGER, a citizen of Canada who resided in the UK, participated in multiple “pump-and-dump” schemes including by coordinating stock promotion campaigns...
From whispered talk here in Mag court it appears they are agreeing to bail conditions with Auringer. But will he, like others are, be immediately picked up by ICE? His lawyers are looking at the courtroom clock. 4:15 pm...
Auringer has been brought out by US Marshals, in white dress shirt with collar. Lot of whispering about this defendant and his detainer. If he was arrested in Milan and extradited, why would he unlike others have release on bail agreed to?
Now AUSA and defense lawyer are being taken back into robing room.
They're back. All rise! Judge: Time of arrest?
AUSA: August 24. Judge: You are charges with 9 counts... AUSA: He shall be freed on $1 million bond, secured by $100,000 cash Defense: Those are the conditions we approved.
AUSA: He will be released today on his own signature. No mention of the ICE detainer which was waived around
Adjourned
By August 31 - six days later - the presentment and release of Craig Auringer was still not in the public docket of the case.
More on Substack here
Jump cut to March 29, 2024, in the Mag, thread:
OK - now in same case $100 million fraudster Craig Auringer was immediately released on in August 2023 (Inner City Press scoop), now co-D Ronald Bauer is to be presented, counsel chatting with AUSA. Inner City Press as only media here will live tweet, thread below
Bauer comes out from the holding cell in a suit jacket. His lawyer shows the AUSA what appears to be a bank check. All rise! Judge: Where was he arrested? AUSA: When he arrived at JFK airport.
AUSA: We've made notification to the United Kingdom. Judge: Your are changed with conspiracy to commit securities fraud, concealment money laundering. Defense: My client pleads not guilty to all charges. AUSA: We have agreed a bail package - a bond of $5 million
AUSA: To secured by $125,000 case, jewelry to his lawyer as bailee, and a property in Coconut Creek, Florida. Co-signed by Samantha Bauer and Martha Bauer. He can only travel to NJ, NJ, CT, MA and the UK - also FLA. Surrender UK and Canadian passports to lawyers
AUSA: Released today on his signature but cannot leave for the UK until the property is posted. Defense: He needs at least one passport today. He would like to go down to Florida, he needs his passport to get on the plane. AUSA: As long as the cash is posted
Judge: He'll get his Canadian passport, that's what we're saying? AUSA: Yes. Judge: No contact with co-defendants [from Inner City Press research, not only Craig Auringer but also Peter Mihaylov and Daniel Ferris - and more?]
More on X for Subscribers here & Substack here
The case is US v. Auringer, 22-cr-155 (Engelmayer)
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Winston & Strawn Accused of Copying Rule 12 Motion by Smaller Firm May Face Dec Trial
by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, March 29 – A six-attorney law firm in Boston late on December 26 sued Winston & Strawn for stealing its brief - actually, a Rule 12 Motion which it says was protected by copyright law.
The lawsuit, filed past 10 pm in the U.S. District Court for the Southern District of New York, was found minutes later in the dockets by Inner City Press, which closely covers SDNY - but will not be quoting the complaint, even though that would be fair use.
Hsuanyeh Law Group filed a Rule 12 motion on August 23, 2023 for Phison Electronics Corporation. The motion, it was, was copyrighted as of August 30.
On August 24 Winston and Strawn filed Rule 12 motion that Hsuanyeh says was a"nearly verbatim" copy. Hsuanyeh cites a decision by SDNY Judge Jed S. Rakoff (in White v. West Pub. Corp. 12-cv-1340), and a 2016 CDCA decision.
Winston & Strawn, in a letter annexed to the complaint, argued that "any suggestion that the act of filing the Motion constitutes publication is incorrect." Instead, it was a "public display" on PACER. Note we are quoting from Winston's letter...
On March 29, District Judge Denise L. Cote held a conference. The plaintiffs want a statement; Judge Cote explained the only way to get that is on a summary judgment motion, or trial (which she set for December). In April, there will be a mediator or Magistrate Judge Sarah Netburn.
This case is Hsuanyeh Law Group PC v. Winston & Strawn LLP et al., 23-cv-11193 (Cote)
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NYPD Gina Mestre Helped Gang Murderer Evade Capture Gets 70 Months She Pled To
by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, March 29 – On Cromwell Avenue in The Bronx on November 5, 2020 Andrew Done shot and killed Angel Barreiro.
Then NYPD officer Gina Mestre helped him evade capture for the murder, according to an indictment unsealed on August 15, 2023. Inner City Press had reported on the Done case, resulting in a sentence of 35 years, and covered her arraignment and release on bail on August 16, the only media in the courtroom.
Before U.S. District Court for the Southern District of New York Judge Denise L. Cote, Mestre appeared in a black hooded sweatshirt, a tattoo visible on her arm.
Judge Cote set a January 2024 trial date.
The SDNY prosecutors had already agreed that unlike many defendants down in the Magistrates Court, she could be released on bail: a $250,000 bond with two so-signers.
On December 1 Mestre's lawyer wrote in, "The parties have reached a negotiated disposition in principle... schedule a change of plea hearing for December 7."
On December 7, Mestre's plea was accepted - and the plea agreement, to Count 4, is to a 70 to 87 month guideline, with a 15 year maximum. Plea agreement on Patreon here.
On March 29, she got the 70 months, starting May 10, 2024, thread:
Judge: The Supreme Court has said District Judges can consider a wide range of information at sentencing. Defendant claims her supervisors told her to get close(r) to Mr Done. We'll take a break so the defense and prosecution can talk.
After the break, the sentencing is going forward. Defense: Ms Mestre lost her moral compass. But she had nothing to do with the murder. I've represented police officers who have done a lot worse. She expects to do time, after she finishes her nursing degree
Defense lawyer: Police officers support Gina Mestre. She was told to dress like a prostitute. She list her way with this guy. 70 months would be outrageous.Defense: We say 12 months in jail. AUSA: The police officers in the back of this courtroom [3, it appears] do not support Ms Mestre.
Gina Mestre: I apologize. I'd like to finish my nursing degree.
Judge: I sentence you to 70 months.
Previously the prosecutor asked for an exception to the prohibition, saying in open court that Mestre's "partner" - boyfriend - is a former NYPD officer. Inner City Press has already tweeted that;
more details and name on Substack here.
The case is US v. Mestre, 23-cr-418 (Cote)
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In Sen Menendez Case He Will Not Appeal Speech and Debate Loss So May 6 Trial Holds
SDNY COURTHOUSE, March 28 – Amid reports of investigation against Sen. Robert Menendez for taking gold bars, Inner City Press' sources on September 21 it to expect on Friday, September 22 an appearance in Federal court in Manhattan by Menendez and his wife Nadine Arslanian. This scoop was true.
Later a superseder was unveiled, including charges of bribes to act for Qatar.
On January 10 Menendez filed a motion to dismiss, arguing "the government shockingly fails to disclose the exculpatory fact that [REDACTED]." Full filing on Patreon here
Late on January 10, docketed on January 11, Inner City Press filed to unseal Menendez' redactions - and documents "in the vault."
On January 17, after the NYT also requested (and cited Inner City Press), Judge Stein ordered the parties - including DOJ - to respond by January 22.
On February 1, Judge Stein granted some unsealing - including of some of the material in the vault which Inner City Press requested. Order here.
On March 6, after a guilty plea and then a superseding indictment was filed, counsel for Wael Hana wrote in. Letter on Patreon here.
On March 11, Inner City Press live tweeted the arraignment, and Judge Stein's ruling that the May 6 trial data holds, unless the 2d Circuit stays it on an interlocutory appeal. Thread here
On March 21, Nadine Menendez was before Judge Stein for a Curcio hearing, thread
Judge: Are you appealing? Sen Menendez lawyer: It's up in the air Judge: And you're being transparent [sarcasm] Counsel: It's complex AUSA: We don't plan a lot of 404(b). Judge: March 29 remains the 404(b) deadline. We are adjourned.
On March 28 - after announcing he will not run in the Democratic primary for "his" NJ Senate seat but might as an independent, Menendez through counsel informed that he will not file an interlocutory appeal: "We write to advise the Court that Senator Menendez has elected not to exercise his right to file an interlocutory appeal of this Court’s Order denying his Motion to Dismiss on Speech and Debate Clause and separation of powers grounds (ECF No. 252). The Senator’s decision is principally motivated by his desire to proceed to trial and establish his innocence without further delay. This decision is not intended to, and should not be deemed to, waive any substantive right or argument the Senator has to object to the admission of evidence at trial in violation of his Speech and Debate rights. The Senator reserves all rights to seek appellate review of any and all appealable orders, including the Order referenced above, should it be necessary after the conclusion of trial."
More details on X for Subscribers here and Substack here
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For Crypto Defendant Avi Eisenberg Trial After Code Is Law Fight Mango Markets Subpoena
By Matthew Russell Lee, Patreon Maxwell Book
SDNY COURTROOM, March 27 - In the U.S. District Court for the Southern District of New York on December 27, 2022 a complaint was ordered unsealed charging Avraham Eisenberg with commodities fraud. He was arrested in Puerto Rico.
Inner City Press is covering the case(s), often as the only media in the Mag Court. Related Mag Court live-tweeted thread (more on Patreon here) vlog here
On January 9, Inner City Press came across the CFTC case against Eisenberg, just filed (still with no title in PACER) and put it out on Patreon here. The 21-page civil complaint is, as is often the case, more detailed...
On April 12, the US Attorney's Office filed a motion to intervene and stay the Mango Labs v. Eisenberg case, saying that neither side opposed the stay. The US seeks a "full stay until the conclusion of the parallel criminal case."
More on Substack here.
On June 14, Judge Berman held a proceeding to pick a trial date. Inner City Press covered it, thread here.
On July 27 Eisenberg moved to dismiss and to suppress; he submitted a 7-page affadavit including "In the evening of December 26, 2022, I arrived by airplane at The Luis Munoz Marin International Airport in Carolina, Puerto Rico, just outside of San Juan. 3. I disembarked the airplane with my luggage, a backpack and a suitcase. 4. I walked to the United States Customs counter. There, I was questioned by a United States Customs and Border Protection ("CBP") agent regarding the purpose of the trip I had just completed and general questions about the contents of my luggage. 5. The CBP agent directed me to a specific area several feet away from the Customs counter for additional questioning, and there another CBP officer opened the suitcase and backpack. I recall the agent pulling out the laptop and asking me to turn it on" - full affidavit on Patreon here.
Watch this site.
The complaint is on Patreon here
On February 3, Eisenberg in a yellow jump suit and feet shackled was brought into Magistrates Court at SDNY. He had, at least for the proceeding, the same lawyer Ethereum developer Virgil Griffith had in the North Korea sanctions case he pled guilty in: Brian Klein.
His parents were in the gallery and he looked at them, from two rows away. The prosecutor said that (unlike on Sam Bankman-Fried) they were seeking detention, and that he was consenting at least for now. Here is Inner City Press' thread.
There's more detail on Patreon here.
On February 14, there was a very brief arraignment, thread here
On November 2, 2023 Eisenberg's counsel wrote it seeking to push the December 4 trial to March or April. They said Eisenberg was moved from Essex to the MDC, and not allowed to bring his discovery material with him. The SDNY prosecutors acknowledge that's a problem, but want only a one-week delay to December 11 - or to April, citing an unrelated murder trial.
On November 3, it was moved to April 2024. And on November 21, Judge Amit Subramanian set out questions to be answered in early December, including "Whether any transaction involving USDC, even where it is used as a medium of exchange to purchase something that is not a commodity, is nevertheless a “contract of sale of any commodity” given the statutory and regulatory definitions (see Dkt. 37 at 5-6); Whether the indictment alleges manipulation as to the price of USDC, deceptive conduct affecting the USDC market, or deceptive conduct otherwise “in connection with” a contract of sale of USDC (see Dkt. 37 at 7–8); Whether the indictment alleges a manipulative device “in connection with . . . any swap” where Eisenberg was the party on both ends of the MNGO Perpetuals" - full order and questions on Patreon here.
On March 14, 2024, there was a hearing on motions in limine and experts. Inner City Press live tweeted here
AUSA: We're getting toward a "code is law" inference...Question as to terms of service, in defi, who the duty is between... They will be arguing Mango Markets should have seen this coming Eisenberg's lawyer: What he did was not criminal.
On March 19, Judge Subramanian ruled: "ORDER & OPINION as to Avraham Eisenberg. For the reasons stated above and on the record at the March 14, 2024 hearing, Eisenberg's motion to preclude Mr. Jain's rebuttal opinion is DENIED without prejudice as to Mr. Jain's first rebuttal opinion and GRANTED as to Mr. Jain's second rebuttal opinion. The Government's motions are DENIED insofar as they seek to exclude Mr. Sheridan or Dr. Montgomery from testifying. But Mr. Sheridan's testimony is limited as explained above. In addition, as addressed at the hearing and based on the understandings and representations made by counsel at the hearing, the experts will not be permitted to offer the following testimony at trial: Testimony suggesting that Mango Markets protocol designers had a certain intent (such as to permit or prohibit certain conduct or trades); Testimony suggesting that USDC was designed for a certain purpose; Testimony that Eisenberg "strategically utilized" Mango Markets' mechanics or code; Testimony that Eisenberg or any other traders had a certain intent (e.g., by stating that Eisenberg's conduct "brought to light," "exposed," or "highlighted" vulnerabilities); Testimony suggesting that Eisenberg's conduct was lawful because it was permitted by Mango Markets' system or protocols, or because of the lack of terms of service; Testimony that offers a definition of "swap" other than the one given in the CEA; Testimony as to whether MNGO perpetuals are similar to or different than "conventional" or "traditional" swaps. If the Government opens the door by Mr. Jain comparing MNGO perpetuals to traditional or conventional swaps, then Eisenberg's experts will be allowed to respond in kind; and Testimony describing market activity as "natural" or a price as "artificial." The Clerk of Court is directed to terminate the motions at Dkts. 80, 90, and 91. (Signed by Judge Arun Subramanian on 3/19/2024)."
We will continue to cover the case.
In a parallel civil case, on February 24, 2023 there was an hour and a half argument in Mango Labs v. Eisenberg before Judge Lewis J. Liman. Inner City Press live tweeted...
Ultimately Judge Liman extended the TRO for two weeks, after for two letters by Tuesday, and said he will rule on March 10.
On March 10, Inner City Press was there, thread here
On March 27, one of Eisenberg's counsel wrote in supporting his subpoena of Mango Markets founders Dafydd Durairaj and Max Schneider, noting that Durairaj "is expected to be a critical government witness."
More with analysis on Substack here
Watch this site.
Inner City Press will have more on these cases.
The criminal case is US v. Eisenberg, 23-cr-10 (Subramanian)
The stayed CFTC case is Communities Futures Trading Commission v. Eisenberg, 23-cv-173 (Schofield)
The Mango Labbs civil case is Mango Labs, LLC v. Eisenberg, 23-cv-665 (Liman)
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