In re Tether and Bitfinex Crypto Asset Litigation

Background

The opinion addresses a discovery dispute between Plaintiffs and Bittrex, Inc. Discovery is the pretrial exchange of information and documents between parties. Plaintiffs sought a pre-motion conference concerning search terms Bittrex would use to identify documents responsive to several requests for production.

The dispute concerned whether Bittrex’s searches had to include the limitation “AND (Tether OR USDT).” Plaintiffs argued that this limitation could exclude relevant documents about alleged market manipulation because Bittrex employees might have discussed trades or transactions involving Bitfinex without specifically mentioning “Tether” or “USDT.” Bittrex argued that searches without the limitation would collect irrelevant documents and would not be proportional to Plaintiffs’ allegations.

Bittrex estimated that searches without the limitation would require review of 1,536 additional documents and 117 additional Slack transcripts, as well as associated family documents. Bittrex also proposed adding “Bitfinex” to certain searches as a narrower way to address Plaintiffs’ concerns.

Court’s Analysis

The court first considered relevance. It concluded that Plaintiffs had met their initial burden of showing that the broader searches could locate relevant documents. The court rejected Bittrex’s argument that the possibility of irrelevant search results required use of the limitation. The presence of some irrelevant documents did not, by itself, justify narrowing the searches.

The court also considered burden and proportionality. Although the parties disagreed about how difficult the additional review would be, the court concluded that the additional documents represented an 18.7% increase and that this increase was not disproportionate or unduly burdensome in light of the substantial discovery in the case, the electronic nature of the discovery, and the allegations in the consolidated class action complaint. The court determined that the possible relevance of the additional documents outweighed the incremental burden.

The court did not consider the substantive arguments in Plaintiffs’ reply letter because it generally does not allow such reply letters. It did consider new information about Bittrex’s proposed modified searches, but concluded that Bittrex’s proposal did not include all terms Plaintiffs considered relevant and was not accompanied by hit reports.

Ruling

Judge Katherine Polk Failla ordered Bittrex to run the search proposed in Plaintiffs’ letter motion without using the “Tether” or “USDT” limitation. The court stated that the parties should continue trying to resolve discovery disputes without court intervention. The Clerk of Court was directed to terminate the pending motion at docket entry 264.