Wednesday, October 5, 2022

Ava Labs Controversy: AVAX Down as Lawyer Claims Dfinity Entrapment

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Key Takeaways

Crypto “whistleblower” Crypto Leaks published a report alleging that Ava Labs had paid off law firm Roche Freedman to sue Avalanche’s competitors over the weekend.
The Avalanche ecosystem is suffering amid the controversy.
The lawyer who was filmed as part of the Crypto Leaks’ report has said that the statements he made related to Ava Labs were “obtained through deceptive means” by an employee of Dfinity founder Dominic Williams.

GameFi project Trident has gone back on its plan to launch on Avalanche since the allegations surrounding Ava Labs surfaced. Avalanche’s AVAX token has also plummeted. 

Avalanche Suffers Amid Lawyer Allegations Even if the recent claims that Ava Labs secretly colluded with lawyers to damage other projects are unsubstantiated, they’re still hurting the Avalanche ecosystem. 

GameFi project Trident posted an update in response to the allegations late Sunday, saying it had decided to scrap its plan to launch on Avalanche. “In light of recent news, Trident will not be deploying on Avalanche as previously planned,” the project’s wrote on Twitter, revealing it would instead launch on the Ethereum Layer 2 network Arbitrum. 

In light of recent news, Trident will not be deploying on Avalanche as previously planned.

Instead, we take Atlantis to Arbitrum.

Thank you.

— Trident Ψ (@TridentDAO) August 28, 2022

Trident’s update came after the self-described “whistleblower” Crypto Leaks published an August 26 article alleging that Ava Labs had paid off legal firm Roche Freedman to sue Avalanche’s competitors and keep regulators at a distance. The report circulated on Crypto Twitter late Sunday, helped by a now-deleted post from Binance CEO Changpeng Zhao. Ava Labs executives Emin Gün Sirer and Kevin Sekniqi both dismissed the report, with Sirer describing it as “conspiracy theory nonsense.”

Investors are also bearing the brunt of the allegations. As is often the case when a project is hit with bad news, Avalanche’s AVAX token tanked over 8% Sunday as the Crypto Leaks article did the rounds. It’s since posted a slight recovery to $19.04, down 4.8% over the past 24 hours. 

Though the veracity of the allegations has been called into question, several crypto commentators have criticized Ava Labs since it surfaced. UpOnly co-host Cobie posted a tweet highlighting how he thinks “biased reporting” and several other points discredit Crypto Leaks, before taking a shot at Ava Labs. “Things that look bad for ava labs… the video lol,” he wrote. 

Kyle Roche Breaks Silence on Ava Labs DramaWhile Ava Labs has opted against posting an official statement on the allegations, Roche Freedman founding partner Kyle Roche, who appeared in a series of undercover video clips as part of Crypto Leaks’ report, broke his silence on the incident today. “[The report] contains numerous unsourced false statements and illegally obtained, highly edited video clips that are not presented with accurate context,” he wrote. 

Roche alleges that he was interviewed by Christen Ager-Hanssen, an employee of Dfinity founder Dominic Williams. Roche’s firm filed a lawsuit against Dfinity in August 2021. Dfinity is the development team behind Internet Computer, a Layer 1 network that was once among crypto’s most hotly anticipated projects. However, Internet Computer suffered a rapid fall in 2021 after its ICP token plummeted 95% in a matter of weeks, leading to allegations that Dfinity had been “dumping” coins on investors.

Roche said that while his firm has represented Ava Labs since 2019, the company has had no influence over any lawsuits Roche Freedman has filed. “Statements in the video to the contrary are false, and were obtained through deceptive means, including a deliberate scheme to intoxicate and then exploit me,” Roche wrote. “The statements are highly edited and spliced out of context.” 

Roche didn’t explain his comments about how he helps Ava Labs evade regulatory oversight from the SEC and CFTC, nor did he share details of the compensation Rocheman Freed received for representing Ava Labs. 

Neither Roche Freedman nor Ava Labs responded to Crypto Briefing’s request for comment on the allegations. Crypto Briefing also reached out to Williams and Ager-Hanssen and will update this piece with a comment if they respond. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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