Ava Labs, the company behind the Avalanche blockchain, allegedly hired lawyers to sue its competition and hold off regulators. According to a report published by cryptocurrency whistleblower site Crypto Leaks, Ava Labs hired the Roche Freedman law firm. It hired the firm to file class action lawsuits against the likes of Binance, Solana Labs and the Dfinity Foundation. Ava executives firmly deny the allegations.
Roche Freedman, led by CEO Kyle Roche, accepted millions in Ava Labs stock and Avalanche's AVAX cryptocurrency to collect confidential info on other companies to pursue class action lawsuits. Then Roche Freedman filed at least 25 cases against competitors. That was largely to distract regulators from Ava's operations, according to the report. Crypto Leaks included videos of Roche discussing the scheme, which has reportedly been underway since at least August 2019.
Meanwhile, Ava Labs CEO Emin Gun Sirer denies the allegations from Crypto Leaks. And Roche says the report included highly-edited video clips that were taken out of context.
Ava Labs, Roche Hit Back
In a Medium post, Sirer wrote, "These claims evidently came about when Kyle Roche, a lawyer at a firm we retained in the early days of our company, tried to impress a potential business partner by making false claims about the nature of his work for Ava Labs." Roche isn't responsible for regulatory matters, Sirer added. It files lawsuits independently of the company and has only represented them in a "couple run-of-the-mill corporate contract disputes," Sirer said.
Roche says the videos were from a meeting with Christen Ager-Hanssen. He claims Ager-Hanssen works for the creator of ICP Token, a crypto firm that Roche sued for securities fraud. Roche called the situation, "a deliberate scheme to intoxicate, and then exploit me, using leading questions."
However, in a separate interview with CoinGeek, Ager-Hanssen said he has "nothing to do with" ICP and didn't know about Crypto Leaks until he was named in Roche's post. Ager-Hanssen admitted the pair met to discuss litigation funding. He says the meeting was set up by Ava Labs' business development director. He says the videos were shot at his residence, but he was unaware of the recordings. "If I was doing an operation like this, I wouldn't use my own name," Ager-Hassen told CoinGeek.
Blockchain Litigation Partnership
While Sirer and Roche claim their firms only have an arms-length relationship, they have a history of working together on projects. In December 2020, Ava Labs and Roche Freedman (Roche Cyrulnik Freedman at the time) launched the first Initial Litigation Offering (ILO). The ILO was a blockchain-based litigation financing product. Investors could buy into the ILO to help fund certain legal cases and receive a portion of the payout if things go their way.
AVAX Token Performance
The AVAX crypto's price fell from $20.20 on Friday following the report, but recovered to trade around $19.56 by Tuesday's closing bell.
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