Ava Labs CEO Rejects Report Alleging Conspiracy with Law Firm

Shalini Nagarajan
Shalini Nagarajan August 29, 2022
Updated 2022/08/29 at 11:44 AM
6 Min Read
  • The pact reportedly directed Kyle Roche to sue crypto companies “gangster style” and distract regulators
  • Roche has sued crypto companies including Solana and Binance

Ava Labs’ CEO Emin Gün Sirer has denied allegations that the company paid off a law firm to harm competitors via class-action lawsuits and to distract regulators.

CryptoLeaks claimed in a report on Friday that Ava, the core developer of the Avalanche blockchain, struck a secret pact in September 2019 with lawyer Kyle Roche.

Under the alleged deal, Ava granted a 1% of the supply of AVAX tokens and a similar amount of equity to Roche in exchange for bringing lawsuits against parties in crypto.

The outlet also posted a series of surreptitiously recorded videos — without attribution — that shows Kyle discussing his close relationship with Ava Labs’ CEO and COO, whom he said he trusted like brothers.

“We did a deal where I agreed to provide legal services in exchange for a certain percentage of the token supply,” Kyle said, adding that he was the first person to receive Ava Labs’ equity after VC firm Andreesen Horowitz.

CryptoLeaks alleged that the pact was meant to use the American legal system “gangster style” to harm Ava Labs’ or Avalanche’s competitors, steer regulatory attention away from the company’s commercial nature by suing other crypto actors and secretly pursue Emin Gün Sirer’s personal vendettas against individuals.

“I think litigation is an underused tool by everyone,” Roche said.

During the discovery process in litigation, attorneys are able to compel the production of documents and information. The simple fact of a lawsuit itself may cause negative publicity about the defendant.

In the videos, Kyle also describes himself as Ava Labs’ in-house crypto expert.

“I’m one of the top 10 people in the world. I’ve seen the insides of every single crypto company.”

Roche’s LinkedIn profile, however, shows no links to Ava or Avalanche.

He also claims Ava Labs hasn’t been sued, as he’s ensured the SEC has “other magnets to go after.”

Sirer reacted to the allegations early Monday, calling the information in the report “conspiracy theory nonsense.”

Ava Labs was founded in 2018 and counts 27 investors including Galaxy Digital, Balaji Srinivasan and Polychain, Crunchbase data shows. The firm’s Avalanche blockchain closed a $230 million token sale led by embattled crypto hedge fund Three Arrows Capital in September last year.

Ava Labs CEO publicly cheers lawsuit filed by Roche Freedman

In October, Roche Freedman filed a class-action lawsuit against Tether and Bitfinex for allegedly manipulating the cryptocurrency market “to create the largest bubble in history.”

Ava Labs CEO cheered the move on Twitter, praising the law firm behind the case as “absolutely top notch.”

In July, Roche Freedman sued Solana for the alleged sale and promotion of unregistered securities. Before that, the firm sued Binance over claims the exchange illegally sold UST to investors and caused hefty losses for them. CryptoLeaks alleges the firm has currently filed 25 class actions so far.

Mixed reactions to CryptoLeaks’ claims

Not everyone in the crypto community appeared to trust the CryptoLeaks report, with some claiming the information does not prove anyone has been wronged.

Andrew Thurman, a content lead at blockchain analytics firm Nansen, claimed that the outlet is funded by Internet Computer. Notably, Roche Freedman last year filed a class action lawsuit against Dfinity — the company behind Internet Computer.

Others including crypto VC Mike Dudas said on Twitter the allegations need to be addressed by Ava Labs’ core team.

Ava Labs and Roche Freedman didn’t return Blockworks’ request for comment by press time.

The AVAX token is down 12% over the past 24 hours according to data compiled by Blockworks.

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The post Ava Labs CEO Rejects Report Alleging Conspiracy with Law Firm appeared first on Blockworks.

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