Kyle Roche eating on a table with text on image litigation is the most uncorrelated asset

Advice for Kyle Roche, Ava Labs: When you’re in a hole, stop digging

Ava Labs’ attempts to distance itself from Roche Freedman LLP’s anti-competitive litigation funding efforts are being refuted by Kyle Roche’s own pitches to prospective investors in the scheme.

On Monday, Ava Labs CEO Emin Gün Sirer issued a public response to attorney Kyle Roche’s claims about how the pair weaponized the legal system to target rivals of Ava Labs’ ‘cryptocurrency’ token AVAX. Roche was the star of some damning videos surreptitiously recorded by Crypto Leaks whistleblowers that show Roche bragging about how tight he was with Ava Labs’ principals and how they’d used class action suits as a means of obtaining privileged information on Ava Labs’ rivals. Roche also claimed to have helped ensure that U.S. regulatory focus remained on these rivals rather than on Ava Labs.

The Crypto Leaks videos showed Roche bragging about how he “took down one of Gün’s biggest archnemeses” through his firm’s representation of Ira Kleiman in the latter’s failed lawsuit against Dr. Craig Wright. Roche described how public recognition of Wright as the real-world figure behind Satoshi Nakamoto—the pseudonym credited with authoring the 2008 Bitcoin white paper—“drove Gün crazy.”

Ira brought that suit based on his claim that Wright had a partnership with Ira’s late brother Dave Kleiman to mine Bitcoin. Wright has acknowledged that Dave, a longtime colleague and close friend, helped him edit the white paper but that’s where their Bitcoin collaboration ended.

While Roche Freedman loudly proclaimed victory following the verdict in Kleiman v Wright, the fact that their side lost six of seven counts is reflected in the fact that the supposed ‘victors’ continue to seek a retrial. These requests have to date been batted away by the court, but Roche Freedman continues to rehash losing arguments in a bid to overturn their great legal triumph.

Now, the public release of a pitch-deck describing Roche’s plans for an ‘initial litigation offering’ (ILO) that would rely on Ava Labs’ Avalanche protocol has undermined Emin’s attempts to distance his group from the law firm. It also connects Roche Freedman’s pursuit of a major payday from Kleiman v Wright with the idea of weaponizing blockchain technology for anti-competitive purposes.

The seed is planted

Early on in the Kleiman v Wright discovery process, Ira revealed that he’d received third-party financial support to launch his civil suit. These deep-pocketed supporters were eventually identified as Parabellum Capital, a well-known litigation funder. The suggestion that Ira had already sold his interest in the trial’s outcome went a long way towards explaining his apparent disinterest in the actual court proceedings.

Combining this litigation funding experience with Roche’s already deep ties to Avalanche—Roche bragged on the Crypto Leaks videos about having “a point” in both the overall supply of AVAX tokens and equity in Ava Labs itself—appears to have lit a fire under Roche in terms of further exploring this potentially lucrative angle.

Emin claimed that the slew of class action suits filed against various blockchain companies by Roche Freedman LLP were all filed “independently of [Ava Labs]” and that Roche has “only represented Ava Labs in a defensive capacity in a couple run-of-the-mill corporate contract disputes.”

Trouble is, Avalanche was pitching its first ILO as early as December 2020 and citing Roche Cyrulnik Freedman LLP as the legal eagles leading the charge. (Founding partner Jason Cyrulnik was later purged from the law firm, sparking duelling lawsuits over who got to keep his 25% share of the AVAX tokens the firm had been gifted since September 2019 for being Ava Labs’ courtroom collaborators.)

That same announcement quoted Kyle Roche fawning over “the innovative minds at Ava Labs” for teaming up on this opportunity to “provide even greater access to justice in our society.” A release by Republic Advisory Services, another party to the ILO project, cited a “partnership with Avalanche and Roche Cyrulnik Freedman.” (Emphasis added.)

The ILO platform was dubbed Ryval, and while a website was launched in December 2020, it remains a threadbare affair. There’s literally nothing other than a Twitter address and a claim of “50%+ Annual Returns.” This January, a sheepish Roche told Motherboard that the promoted rate of return “may be a little high” but that 50%+ figure remains on the site unaltered. Ryval’s first ILO closed in March, raising nearly $350,000 from 170 investors with a minimum $100 stake.

The Ryval investor pitch deck, seen by CoinGeek, says the company is seeking $6 million at a $100 million valuation “to build upon the learnings of our first ILO and build our proprietary platform” to launch an additional 3-4 ILOs in the second half of 2022.

The pitch deck spells out a plan for the “Ryval team to work with Ava Labs engineering resources until full-time team is hired.” There’s no timeline for when this non-Ava Labs team might be in place, leaving open the possibility that Ava Labs will continue to provide these ‘resources’ until eternity beckons.

Be aggressive, B-E aggressive

One of Ryval’s would-be large-scale investors, self-described ‘serial entrepreneur’ Christen Ager-Hanssen, gave an interview to CoinGeek’s Kurt Wuckert Jr. on Monday, during which Ager-Hanssen expressed dismay at learning of Roche’s “abuse” of the legal system to target Ava Labs’ rivals.

Ager-Hanssen has since gone public with documentation indicating that his meeting with Roche was organized by Ava Labs’ biz-dev director Sam Wang. Furthermore, a February 2022 email from Roche to Ager-Hanssen says he’s “looking forward to you meeting [Emin] and [Ava Labs COO Kevin Sekniqi] in NYC next week” based on Roche’s belief that “there is an immense opportunity to build out the ecosystem we discussed.”

Roche’s email goes on to pitch the wonders of the AVAX blockchain, on which Ryval’s payment and property transfer rails are to be built. (The pitch deck goes further on this linkage, describing how Ryval “leverages patent-protected technology developed by Ava Labs and Kyle Roche to tokenize litigation funding.”)

Roche also tells Ager-Hanssen that Emin and Sekniqi “would be very interested in building out an ecosystem like this with you” based on Roche’s belief that Ager-Hanssen’s “world vision will very much align with the disruption Ava Labs is bringing to the world of digital assets.”

Honestly, this kind of naked shilling conjures up images of Roche in a high school cheerleader outfit, with one pom marked ‘Ava’ and the other marked ‘Labs.’ Whatever protestations Emin might shout to the rooftops about the lack of connection twixt his firm and Roche, somebody clearly forgot to tell Roche.

The fine print

In February, the American Bar Association weighed in on the subject of Ryval’s first ILO, with one academic expressing concern that “people aren’t really going to understand what they’re investing in.” A litigation finance attorney suggested Ryval’s future ILOs needed to provide more information than was listed on its first overture to would-be backers.

But even the information provided on the initial ILO appears problematic. First, there’s the fact that rank-and-file ‘investors’ will always be last in line to collect on any damages. The paperwork states that the tokens on offer “shall be of no value, or the value will be reduced, if Proceeds receved [sic] from the Final Determination of the Lawsuit are insufficient to repay Buyers in full or at all subsequent to payment of Law Firm’s Contingency Fee and reimbursement of Law Firm’s unpaid Claims Expenses.”

There’s also the fact that investors would only see 80% of their investment returned should a court dismiss a Ryval-financed suit, regardless of whether the retained 20% vastly exceeds the costs of pursuing their doomed lawsuit.

In the event of a successful lawsuit, investors who fail to claim their winnings within a year won’t get to claim them. And while ‘accredited investors’ can trade their ILO tokens out of the gate, rank-and-file investors are looking at a one-year lockup period.

In January, one would-be backer queried Roche whether they’d be able to sign up anonymously, aka without undergoing any ‘know your customer’ requirements. Roche replied that Ryval was “looking into potential solutions” on that front, which stands in stark contrast to what Roche told the ABA in February, namely, that the litigation funding market “should be transparent and should be out in the open.”

Roche’s initial response to the Crypto Leaks release was to accuse Ager-Hanssen of getting him drunk and setting him up. (Ager-Hanssen told Wuckert that he took Roche to a private club, where Roche got so inebriated that “he couldn’t walk down the stairs,” leading Ager-Hanssen to request that the club stop serving Roche.)

On Tuesday, Ager-Hanssen pushed back harder against Roche’s claims, saying he had “absolutely nothing to do with Cryptoleaks or the filming of Kyle Roche.” Ager-Hanssen added that he was “shocked” by the revelations of Roche Freedman’s anti-competitive lawsuits and expressed the hope that Roche’s “license will be revoked by the Bar.”

Ager-Hanssen also released yet another email from Ava Labs’ Sam Wang in which the latter references “our litigation financing plans” and that Wang will be “putting you in touch with Kyle Roche who is leading up that initiative for us.”

Roche’s Monday missive denied the existence of “a ‘secret pact’ between my firm and Ava Labs.” Perhaps that’s because the ties between the two are anything but a secret.

Watch: CoinGeek’s Kurt Wuckert Jr. interviews Christen Ager-Hanssen

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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