JR Ferrer ParisOn Friday, lawyers for the Central Bank of Venezuela (CBV) filed a new amended civil complaint against DolarToday, the US-based website that publishes a daily unofficial exchange rate between American dollars and Venezuelan bolivares.
The Venezuelan government has made it a crime to publish the street trading rate as it countermands the “official” exchange rates, which are far more favorable to the government.
The recent collapse of the price of oil has exacerbated Venezuela’s economic woes; the country is widely expected to default on its international debts later this year.
Late last month, US District Judge Gregory Sleet ruled in favor of DolarToday’s earlier motion to dismiss.
In his two-page ruling, Judge Sleet found that the CBV lacked standing and dismissed the case. However, he allowed the CBV to file an amended complaint within seven days, which it has now done.
As Judge Sleet wrote:
Price inflation in a nation’s economy is not an injury sufficiently particularized to the Central Bank. Rather, inflation is a generalized harm.
Additionally, an alleged injury must. be “concrete” both qualitatively and temporally. Whitmore v.
Arkansas, 495 U.S. 149, 155; 158, (1990). Here, inflation is not sufficiently identifiable, but a hypothetical injury. Having found that there is no injury is fact, the court need not reach the remaining standing requirements.
In conclusion, Central Bank lacks Article III standing and the court lacks subject matter jurisdiction as a matter of law.
In the new filing, the CBV’s lawyers largely re-iterate nearly all of its previous arguments.
CBV’s legal team now adds specific injuries, which include:
Reputational harm because Defendants’ reporting of manufactured exchange rates have created the false impression in the public that the Central Bank’s monetary policies are ineffectual and that it cannot manage the Venezuelan economy; and
Deprived the Central Bank of capital that it would attract and retain, by having caused numerous entities and persons to invest their capital elsewhere than Venezuela.
Ars asked Adam Fox, one of the CBV’s attorneys, whether the CBV is claiming that the Venezuelan economy would be stable and well-functioning if not for the DolarToday website.
“The point of this lawsuit is that the DolarToday Defendants are publishing a fabricated exchange rate that is causing the Central Bank economic and reputational harm,” he e-mailed. “The implicit suggestion of your questions that Venezuela also faces economic challenges that may be independent of those imposed by the DolarToday defendants is beside the point.”
In a statement, Ben Wolkov, general counsel for DolarToday, described the lawsuit as “baseless” in a Thursday statement.
“As a US-based media outlet with rights to freedom of speech and freedom of the press, DolarToday will continue to focus on its dual mission of informing Venezuelans about the country’s social, political, and economic affairs and serving as a credible and authoritative source for other media outlets attempting to report on Venezuela,” he said.
Printing more money is bound to solve the problem, right?
In the initial October 2015 civil complaint, the US-based lawyer for the CBV argued that the three Venezuelan-American men who run the site are engaged in “cyber-terrorism” designed to create “the false impression that the Central Bank and the Republic are incapable of managing Venezuela’s economy.”
It is no exaggeration to say that the Venezuelan economy has been in something of a tailspin in recent years.
Its authoritarian president, Nicolas Maduro (successor of strongman Hugo Chavez), has been unable to rein in skyrocketing inflation (now at 180 percent) and a massively depressed economy.
The country recently sent $1.28 billion worth of gold to Switzerland as a way to avoid a default. On Thursday, the president of the CBV told the Associated Press that the country would be printing larger bills to accommodate skyrocketing inflation.
DolarToday, as it explains in its motion to dismiss, does nothing more than call currency traders on the Venezuelan-Colombian border to find out what the exchange rate is between bolivares and pesos.
The site simply converts the pesos to dollars to find out the market rate between bolivares and dollars.
The site then publishes that figure.
Venezuela has maintained strict currency controls since 2003 and its currency cannot—at least officially—be traded on the open market.
The government maintains multiple “official” exchange rates, which differ depending on what purpose the foreign currency is needed for.
The black market exchange rate, at least according to DolarToday, is significantly higher.
As of this writing, $1 buys about 975 bolivares.
For years, the Venezuelan government has blocked domestic access to the US-based site.
“While the Venezuelan government has made it illegal for anyone to publish black market currency rates in Venezuela and has blocked DolarToday’s website from the Internet in that country, Venezuelans access the DolarToday rate on DolarToday’s Facebook, Twitter, and Instagram pages,” Ricardo A.
Gonzalez, another attorney who represents the website, said in the same Thursday statement.