Ava Labs, the company behind the Avalanche blockchain project, is being buried in reaching allegations that they and their attorney were working in cahoots to attack market competitors “gangster style” by targeting crypto projects in class action lawsuits. Meanwhile, the attorney is clapping back, calling it a hit job from an Ava Competitor, namely Dfinity.
The allegations, published last Friday, come from the website CryptoLeaks, which previously made allegations against FTX and crypto analyst firm Arkham Intelligence alongside The New York Times. Based on supposed hidden camera footage of an interview with Ava Labs’ lead attorney Kyle Roche, the self-proclaimed “whistleblowers” claimed the company and firm have worked in tandem to turn the U.S. legal system against competitors and “pursue [Ava Labs’ CEO] Emin Gün Sirer’s personal vendettas.” The videos have not been attributed, and the report did not state where and how it managed to record the conversation.
The report alleges Kyle Roche, founding partner at Miami-based firm Roche Freedman, had more than a normal lawyer-client relationship with Ava Labs. According to the report, Ava Labs and Roche Freedman have used class action lawsuits to legally assault other companies while keeping the ire of regulatory agencies off its own projects. In compensation, Roche received an equity stake in Ava Labs, alongside 1% of the supply of AVAX tokens, the main token for the Avalanche blockchain.
“We did a deal where I agreed to provide legal services in exchange for a certain percentage of the token supply,” Roche said in the spy camera video. Ava Labs was previously backed by crypto kingmaker investment firm a16z run by Andreeson Horowitz as well as groups like Initialized Capital and Polychain, according to Crunchbase data. Still, Roche was “the first” person to gain any stake in the company, according to the report.
In a tweet, Crypto Leaks further alleged Roche has a big stake in Ava Labs, based on a lawsuit filed by a former partner, Jason Cyrulnik.
The whistleblowers claim that all these lawsuits gave their attorney access to company data granted by discovery, a pre-trial process by which plaintiffs and defendants in a lawsuit know what evidence the other side will present during a trial, to gain access to competitors “investors, contractual agreements with partners, customer lists,” internal communications, and more. They base this allegation on more hidden camera video where Roche says: “I sue half the companies in this space, I know where this market is going… I’ve seen the insides of every single crypto company.”
Class action lawsuits are a common aspect of the crypto industry, as is the case for any financial-based institution when things aren’t going swimmingly. The struggling exchange Coinbase was hit with four separate class action attempts this past month alone. But Roche has been at the head of several large-scale class actions, including one filed against Binance back in June that gained sweeping news coverage online. The law firm has said it is planning similar claims against other exchanges like Coinbase, Kraken, and Gemini. Video reportedly shows Roche saying he can sue “for the sport of it,” thanks to his deal with Ava Labs, and he never uses their name in any of his suits.
Otherwise, these lawsuits against competitors have kept the eyes of agencies like the Securities and Exchange Commission off Avalanche by creating “other magnets,” for their attention through these lawsuits. Because of his work, “there’s no such thing as regulation for what they want to do.”
In response to a request for comment, Roche directed Gizmodo to a blog post he posted Monday morning in response to the anonymous report. He alleges these videos were recorded during private meetings with Christen Ager-Hanssen, a Norwegian venture capitalist. He said Ager-Hanssen came to him to talk up an investment in a technology startup, but that he was actually there “to deceive and entrap me... using a deliberate scheme to intoxicate and then exploit me using leading questions.”
Other than getting Roche drunk and loose-lipped, he further claimed there is no pact between his firm and Ava Labs, and that their work with Ava is “focused on defense side cases typical of any large corporation. Ava Labs has had no input, control, or insight into any of our firm’s plaintiff-side class action cases and we have never filed a class action on their behalf or at their request.” He further says that their plaintiff side practice has “remained a source of disagreement” with Ava, and that the crypto company has complained about those cases.
What makes this even more crazy is that Roche claims Ager-Hanssen was working on behalf of Ava competitor Dominic Williams, the founder of the nonprofit Dfinity Foundation and creator of the ICP token. We reached back to ask if Roche had any data to back up these specific claims against Williams or Ager-Hanssen, but we did not immediately hear back.
Williams tweeted about the report when it was first released complaining about a previous lawsuit filed by Roche Freedman against his foundation. CryptoLeaks’ previous report calling Akham and The New York Time’s ICP report false and “corrupt” was published a few weeks before Dfinity sued the paper and Arkham for defamation.
When reached by phone, Ager-Hanssen claimed to Gizmodo he “had no clue” their conversation was being recorded. He claimed that he was introduced to Roche through a London-based business consultant, and that he had gone to Roche to talk about investment in decentralized finance and blockchain tech. Gizmodo has not yet independently verified the name of this supposed intermediary.
Ager-Hanssen further said that he was only in conversation with Roche during the meeting at the law firm’s office. Other hidden camera videos took place in a restaurant setting, which the venture capitalist said he wasn’t there for and had no idea what had been said. He further claimed that while he thought Roche’s comments about his firm’s legal practices were “not purely ethical,” he had no knowledge of any attempted secret whistleblower operation. He said his attempts to contact either Roche or this intermediary were unsuccessful.
Dfinity did not immediately respond to a request for comment.
In a statement provided to Gizmodo, Ava CEO Sirer denied that they engage or support anything what the video clips allege. He said that they had never directed Roche in which cases he selects, and that Roche “only represented Ava Labs in a defensive capacity” in contract disputes and a libel case. He further claimed that his company was previously “livid” Roche was in the process of suing Solana “and attempted to persuade him to drop the case.” In a tweet, Sirer further called all this “conspiracy theory nonsense.”
The report uses more than a little conjecture and assumption to attack Roche and the Avalanche developers, even beyond the already firm statements made by Roche in the hidden camera video. The whistleblowers attack Roche for his LinkedIn account listing the New York City area as his location even though he’s now based in Miami after moving “for tax purposes,” according to leaked video. Of course, not updating one’s LinkedIn isn’t a crime or some evidence for cover up, though his page does not list his affiliation with Ava Labs, which the report denotes is evidence that Roche Freedman tries to pretend they’re not affiliated with the Avalanche devs all while hurting competitors. Roche said in the video that he moved into a co-working space with Ava Labs back in August, 2019 when he first formed his firm.
The self-cannibalizing nature of established, centralized crypto companies is well-documented. The implosion of Three Arrows Capital, a former crypto hedge fund, has led to big financial problems for multiple projects. As much as whistleblowers called for “an industry where not everything is smoke and mirrors, and where they can trust other people’s integrity,” the report’s been met with both skepticism and support. According to CoinDesk, Changpeng Zhao, the loose-lipped CEO of Binance, tweeted, then deleted, “This is wild. Not sure if this is true, but assuming the videos are not deep fake… And of course Binance was a target. We are not even a competitor.”
This story is developing.
Update 07/29/22 at 2:30 p.m. and 5:00 p.m. ET: This post was updated to include a statement from Emin Gün Sirer and from Christen Ager-Hanssen.