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Ava Labs Report From Crypto Leaks Reveals Avalanche Paid Lawyers to Sue Competitors

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According to a report published on August 26th by cryptocurrency whistleblower Crypto Leaks, Ava Labs, the company responsible for building the Avalanche protocol, gave the law firm Roche Freedman payment in AVAX token along with Ava Labs tokens in exchange for the firm’s assistance in bringing litigation and class-action lawsuits against some of its competitors.

Roche Freedman is known for its work in the cryptocurrency industry with cases like suing Binance U.S. over Terra’s collapse and suing Solana Labs, alleging that SOL was an illegal security.

Several videos included in the report show a person identifying as the founding partner of Roche Freedman, Kyle Roche, saying that his firm was paid to endorse Ava Labs and criticize its rivals, including Dfinity and Solana. 

In the video, Roche asserts that he made a deal with Ava Labs in September 2019 and was the second person to get Ava Labs stock after Andreessen Horowitz, a private U.S. venture capital firm. He stated that “we did a deal where I agreed to provide legal services in exchange for a certain percentage of the token supply… that was September 2019.”

Roche also mentioned that he received “around a point” in tokens and equity, which is likely a reference to a percentage point. He claimed that his allocation was roughly one-third of what Kevin Sekniqi, co-founder and COO of Ava Labs, received.

Roche goes on to describe litigation as “an underused tool” and has insider knowledge of how the crypto space operates. “Because I sue half of the companies in this space, I know where the market is going,” Roche says. 

The Crypto Leaks report states that the law firm is able to accomplish this by frequently using “class actions.” This is where the firm claims to represent a group of people who have been “harmed” (the plaintiffs). For instance, the firm may assert that the tokens of a different blockchain are unlawful securities while certain traders experienced unfair losses as the prices of those tokens dropped.

Class action lawsuit filings are considered “protected speech” in the U.S. This eliminates the risk of Roche Freedman facing a defamation lawsuit when making false allegations about other projects that are wholly untrue (or “libel”). For instance, they filed false allegations in a case they brought against the Dfinity Foundation. 

According to the Crypto Leaks report, Roche Freedman’s goal is to harm the reputations of its targets and cover their brands with false information.

Once filed within the U.S., a specific court procedure called “discovery” may be used for gaining access to someone’s private accounts, business data, emails, and social media posts when suing them. Crypto Leaks states that by obtaining information in this manner, Roche Freedman is able to see everything that Ava Labs competitors are working on.

Later on in the video provided by Crypto Leaks, Roche asserts that Roche Freedman’s legal actions have served to divert U.S. regulators’ attention from Ava Labs. “They haven’t been sued yet, and there’s a reason for that,” he says. Roche adds that “I deal with making sure the SEC and CFTC have other magnets [Avalanche competitors] to go after.”

Ripple and the Origins of Roche Freedman

According to the Crypto Leaks report, Roche held a relatively low position as an associate at the law firm Boies Schiller Flexner prior to starting Roche Freedman and entering into a deal with Ava Labs. 

The firm was defending Ripple against claims that its XRP token was an illegal security. According to Roche, he suggested that their CEO, Brad Garlinghouse, found a new law firm that specializes in suing other cryptocurrency companies, using precisely the same strategies as those being employed against Ripple. 

Roche requested that Garlinghouse become his angel investor for the new firm. Garlinghouse agreed to provide funding.

Ripple has also made attempts to discredit projects that they view as direct competition with their token. In March of 2022, Ripple co-founder Chris Larsen proposed a $5 million plan to fund the “Change the Code, not the climate” campaign to target Bitcoin, the miners, and industry leaders within the space like Elon Musk and Jack Dorsey. 

Larsen’s campaign claimed that Bitcoin’s Proof-of-Work consensus mechanism would need to be changed to Proof-of-Stake in order for the network to benefit from a less energy intensive protocol while having a “lower” impact on the environment. All efforts from Larsen and others have yet to convince participants and industry leaders that this change would be in the best interest of the Bitcoin network.

Responses From Emin Gün Sirer and Others

In October 2019, Roche posted that Roche Freedman “filed a class action lawsuit on behalf of those who own cryptocurrency against Tether and Bitfinex (and others) for manipulating the cryptocurrency market to create the largest bubble in history.”

Ava Labs CEO Emin Gün Sirer retweeted Roche’s statement by saying, “This is a monumental lawsuit against Tether-based manipulation of cryptocurrency prices.” Interestingly, Sirer also noted that Roche Freedman was “top notch.”

With these recent developments revealed by Crypto Leaks, Sirer is now linked with a number of vendettas against individuals and other projects that Roche Freedman has cases against.

Over the weekend, the Crypto Leaks report circulated throughout Twitter. Late on Sunday, the piece was mentioned by a number of well-known accounts which prompted Sirer to respond.

Despite Sirer’s claim that the Crypto Leaks report is “ridiculous” and “conspiracy theory nonsense,” the community expressed why they lean toward believing the allegations against Ava Labs.

CIO and Founder of BlockTower Capital Ari Paul adds that even if all of Crypto Leak's claims are false, Ava Labs and Sirer could potentially claim slander based on Roche's allegations within the video.

Sekniqi shared similar sentiments to Sirer by stating on Twitter that the report is “stupidity to the maximum mega giga level written by some ICP conspiracy site.”

Others in the space like CEO of BrightScope and Digital Assets Data Mike Alfred acknowledged that Avalanche has essentially “committed suicide” with this recent debacle.

DISCLAIMER:

At the BTC Times, we decided to responsibly cover news about altcoins from time to time, provided that we consider them relevant for Bitcoin or interesting for our readers. The goal of these articles will always be to inform, explain, clarify, debunk, and expose, sticking to the objective facts and qualified technical opinions, and never to promote, advertise, or legitimize "coins", "tokens", or other investment propositions.

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Deniz Saat is an IT services specialist, technical writer and editor for BTC Times. His mission is to onboard as many people as possible into the Bitcoin overlay through education and content creation.

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