On August 26th, 2022, a little known whistleblower website, CryptoLeaks.info, published shocking allegations stating that Avalanche's Ava Labs CEO Emin Gün Sirer conspired behind closed doors to take down enemies and competitors.
Sirer, working with crypto law firm Roche Freedman, allegedly targeted a number of competing blockchains, like Solana, in court by filing frivolous lawsuits meant to exhaust resources and waste time.
In return for their services, Roche Freedman received 1% equity in Ava Labs and 1% of the $AVAX token supply before launch. Per the report, this is an unusual amount to grant to early legal counsel, especially considering that, according to Kyle Roche, the compensation was granted when Ava Labs had just five employees.
- CryptoLeaks.info leaked videos allegedly depicting an Avalanche lawyer describing their backroom deal
- The retained law firm is allegedly notorious for using litigation as an aggressive tool, which was reportedly capitalized on by Avalanche
- Avalanche parent company CEO responded, calling allegations “an obvious fraud”
What the taped footage allegedly shows
According to the CryptoLeaks.info article, there is taped footage of Kyle Roche walking interviewers through the deal his firm made with Ava Labs. Roche allegedly refers to the arrangement as being “completely different from being a lawyer," referencing his equity stake and stance that litigation is a competitive tool under-used by everyone in the space.
The tapes appear to depict Roche then saying that he “did very well” financially from the token cut that he was granted, touting the fact that Ava Labs had not been sued yet as a testament to his performance.
Roche Freedman is currently litigating at least 25 class action lawsuits, including suits against major blockchain platforms, including:
- Solana Labs
- Dfinity Foundation
In the videos posted on the CryptoLeaks.info website, Roche also appears to admit that he “sue[s] half the companies in this space," referring to the blockchain space. He also appears to explain that his tactics for winning court battles include not settling, coaxing the jury to his side, and taking advantage of judges who don’t understand how blockchain technologies work.
Avalanche and Roche Freedman respond
Emin Gün Sirer, CEO of Ava Labs, responded to the CryptoLeaks.info article with this tweet:
Sirer calls the allegations "conspiracy theory nonsense" and references his company’s technology and the team as evidence of their credibility. However, it wasn’t clear what exactly Sirer's reasoning was for the tweet until he published a full-length response on Medium.
In Sirer's Medium post, published on August 29th, the Ava Labs CEO distanced himself from Roche Freedman, calling the CryptoLeaks.info allegations “lies” and “an obvious fraud."
Sirer also claimed that Ava Labs retained Roche Freedman briefly, and noted that it was “in the early days” of the company, alongside “more than a dozen law firms we employ for matters relating to tax, corporate, regulatory, and human resources."
The CEO also stated that Ava Labs had not directed what cases Roche Freedman should engage in, and that the law firm had only represented the blockchain company in “a couple (of) run-of-the-mill corporate contract disputes."
Sirer also pointed out in the Medium article that when Roche Freedman went after them, Ava Labs publicly came to Solana’s defense by penning a full-length release on why Solana’s $SOL token is not a security.
Sirer ended the blog short response by stating: “We will carry on building and otherwise working hard for the blockchain community. We encourage everyone to put aside pettiness, personal attacks, and fraudulent lies.”
Roche also released a short post addressing the allegations. In it, he revealed the identity of the interviewers in the videos and denied allegations of a “secret pact."
Roche also defended his statements in the video, saying they were “obtained through deceptive means, including a deliberate scheme to intoxicate, and then exploit me, using leading questions."
The Twittersphere reacts
Feelings about the leak appear to be mixed across the crypto community, with some calling it unsubstantiated and others saying it may be the death of Avalanche.
Binance founder Changpeng Zhao weighed in on the scandal on Twitter, calling the allegations “wild" before deleting the tweet. He later tweeted and asked who's funding the hit pieces.
Ultimately, the burden of figuring out what to believe remains up to the public, as both of the parties in question having made official statements responding to the claims.
The Avalanche token, $AVAX, fell about 11% after the CryptoLeaks.info article was posted on August 26th. It further declined in price when Emin Gün Sirer and Kyle Roche released their statements on August 29th before slowly climbing back up. Thus far there have been no notable changes in AVAX staking rates or AVAX lending rates.