Ava Labs, the developer of multi-billion-dollar blockchain network Avalanche, has been accused of “weaponising the legal system” in order to gain an advantage over its market competition.
The accusations were supported by a series of covertly recorded videos with one of Ava Labs’ legal counsels Kyle Roche of New York law firm Roche Freedman.
Though potentially incriminating, the videos were posted on cryptoleaks.info, a website whose legitimacy has been called into question.
But although sensationalist in nature, the leaked videos make undeniable claims that Ava Labs and Kyle Roche conspired to bring down competition using litigation as a tool.
“I deal with making sure that… the SEC (Securities and Exchange Commission) and the CFTC (Commodities Futures Trading Commission) have other magnets to go after,” said Roche, adding: “Since Gün (referring to Ava Labs founder Emin Gün Sirer) signed me up, I’ve ensured that there’s no such thing as regulation for what they want to do.”
Roche mentioned using litigation as a “tool to competition” by initiating costly class-action law suits.
Since Roche sues “half the companies in this space”, he has “seen the insides of every single crypto company”, presumably due to the discovery process.
Roche boasted of “taking down one of Gün’s biggest archnemeses”, referring to Craig Wright, who has long claimed to be the founder of Bitcoin.
Gün and Roche respond
Sirer thoroughly dismissed the report as “conspiracy theory nonsense” on Twitter and in a blog post.
“Neither I, nor anyone else at Ava Labs ever directed Roche in his selection of cases,” said Sirer. “We do not receive materials or information from him, and we do not entrust our legal affairs to him.”
How could anyone believe something so ridiculous as the conspiracy theory nonsense on Cryptoleaks? We would never engage in the unlawful, unethical and just plain wrong behavior claimed in these self-serving videos and inflammatory article. Our tech & team speak for themselves.
— Emin Gün Sirer???? (@el33th4xor) August 28, 2022
Sirer added: “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 himself has pushed back against the claims presented by Crypto Leaks.
In a statement, Roche suggested that the videos were recorded by Christen Ager-Hanssen, an employee for Dominic Williams, the creator of ICP Token.
Williams is the defendant in a high-profile securities fraud litigation brought by Roche.
In the videos, Roche also claimed that his law firm owns 1% of the total AVAX supply.
If true, that would place his retainer at a market value higher than US$57mln.
AVAX bounces back
Regardless of the validity of the accusations, they caused AVAX token to fall by over 12% on Monday, dragging the price down as low as US$17.5.
However, the AVAX gained substantial support following the dip, rebounded back above the US$20 barrier following a 12% rally.
The strong rebound may suggest the claims have been shrugged off by investors, although the potential for an inquiry into the videos has been raised.
Ava Labs has been approached for comment.