Roche Firm Kicks Off Tether Action After Crypto Leaks Post (1)

A New York judge on Thursday removed Roche Freedman from representing plaintiffs in a class-action lawsuit accusing crypto exchange Bitfinex and Tether, the issuer of the USDT stablecoin, of market manipulation.

The decision is a blow to Roche Freedman after videos posted on a website called Crypto Leaks showed founding partner Kyle Roche bragging about the law firm’s relationship with crypto startup Ava Labs.

Katherine Polk Failla, a U.S. District Judge for the Southern District of New York, said in a hearing Thursday that the firm’s continued involvement in the case could derail litigation. She said she would change her first position as general counsel to remove the firm.

Allowing the firm to continue to serve as an adviser “with the metaphorical baggage they now carry is not best-in-class,” Failla said.

Roche Freedman did not immediately return a request for comment.

During an Oct. 3 hearing, Failla called Roche’s comments “incredibly stupid” and pressed co-founder Devin “Velvel” Freedman on the firm’s conduct while litigating the 2019 lawsuit.

Freedman said Roche’s comments were “stupid” but argued there was no evidence Roche Freedman sued to help Ava Labs and that concerns the law firm was abusing discovery were unfounded.

The law firms of Selendy Gay Elsberg and Schneider Wallace will remain lead counsel for the proposed class, which is pursuing allegations that the defendants manipulated prices.

Roche denial

Roche has denied that his firm has used litigation to target Ava Labs competitors. Ava Labs CEO Emin Gün Sirer has also said that the videos posted on Crypto Leaks showed Roche making false statements about their relationship.

After the disclosure of the tapes in August, Roche’s firm fired him from its class action practice and barred him from participating in ongoing class actions. Freedman argued that it took such steps to guard against the appearance of impropriety.

Still, Bitfinex and Tether moved to terminate Roche Freedman from the case, arguing that the comments raised concerns about the firm’s motivations. Roche Freedman’s co-counsel, meanwhile, argued that starting the firm would eliminate a distraction.

A separate litigation firm filed a motion to replace Roche Freedman as lead attorney, but Failla rejected that application Thursday.

Disqualification

Roche Freedman faces disqualification motions in at least four other cases, according to federal court documents.

Another judge in New York has scheduled a Friday hearing in a case the firm filed on behalf of investors against the Tron Foundation, the company behind the TRON blockchain protocol.

Launched in 2019 by expats from prominent litigation boutique Boies Schiller, Roche Freedman has become one of the most active firms in cryptocurrency class action litigation.

The firm, which was awarded lead adviser status in the Bitfinex and Tether action in 2020, argued that it had the most expertise in digital assets and that Roche’s “false comments” should not incriminate the rest of the firm.

Freedman also claimed during the Oct. 3 hearing that a defendant in one of the actions the firm brought was behind the secret recordings of Roche.

However, Failla said Roche’s comments were “too detailed to dismiss outright.” Nor will the putative class suffer any diminished quality of legal representation with the law firm’s removal, she concluded.