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Ava Labs lays off ‘substantial’ portion of its workforce

Ava Labs has laid off a substantial portion of its workforce, according to a report by Decrypt. Ava Labs founder Emin Gün Sirer confirmed on X that there was a ‘reduction in force’ at the blockchain company, saying that 12% of staff were affected.

“Bear markets are difficult to navigate,” tweeted Sirer. “Ava Labs is fortunate to have significant runway and resources at our disposal, and we will be focusing those resources on advancing the Avalanche ecosystem for years to come.”

Though couched as a mere company resizing in response to poor market conditions, the post’s final paragraph is much more ominous:

“I am deeply thankful to everyone who contributed to Ava Labs and helped champion the Avalanche ecosystem. Let’s not forget the immense progress and impact this team has made across every stretch of our industry.”

The Decrypt report, which appears to have forced Emin Gün Sirer’s hand in responding publicly (the Decrypt report came out less than 24 hours before Sirer’s message), said that the layoffs largely affected the company’s marketing department.

Indeed, it’s been a tough 18 months since Sirer went on record to say that he was preparing the digital asset industry for ‘hyper growth.’ That year saw several large-scale frauds shake the digital asset industry to its core and send asset prices spiraling: the consequence was the collapse of Three Arrows Capital (3AC), FTX, and more. These collapses seem to have been the predicates for the Securities and Exchange Commission (SEC) and other regulators stepping up their enforcement activity, including by taking action against the biggest exchanges in the industry for illegally listing digital asset securities.

However, it’s also fair to question if Ava Labs’ current turmoil is due to the failure of another of its founders’ long-term strategies—albeit this one is far more surreptitious. In 2021, Ava Labs’ attorneys—in particular, Kyle Roche of the firm Roche Freedman (as it was then known)—was caught on camera bragging of his firm’s practice of using fraudulent lawsuits to harass Ava Labs’ competitors (the firm was evidently paid in Ava Labs’ Avalanche tokens for their work). This includes finding ‘straw plaintiffs’ to dupe into entering into doomed lawsuits, according to Roche. Roche explicitly highlights Dr. Craig Wright and his status as the inventor of Bitcoin as the key target of this strategy, apparently coordinated at the behest of Sirer himself.

Indeed, Dr. Wright was sued by a man named Ira Kleiman in 2018. Kleiman, who was represented by Roche Freedman at trial, alleged that Dr. Wright did not invent Bitcoin alone, but had done so in partnership with Kleiman’s late brother Dave. This was doomed from the beginning, given the lack of evidence of this partnership. Though Kleiman lost at trial (his appeal of that loss was also recently denied), the litigation stretched on for years, giving airtime to many unsubstantiated allegations against Dr. Wright.

Ira Kleiman’s loss was so complete that even he caught on to his role as a pawn in Roche Freedman’s scheme to attack Ava Labs competitors: he wrote to the court in the aftermath of the verdict, complaining that Roche Freedman’s representation had been inadequate and accusing the firm of intentionally sabotaging the case, citing Roche’s ‘uniquely stupid’ leaked comments.

Further evidence of this strategy (though it’d be hard to beat a recorded video of Sirer’s main attorney speaking about it in detail) came from an ex-Ava Labs engineer earlier this year, who described Ava Labs as having a ‘vampiric’ attitude towards the firm’s digital asset competitors. This included using a social media army to attack competing projects and speak positively on Ava Labs and its own Avalanche token.

If this strategy was important to Ava Labs’ success —as it would appear from the lengths Sirer has gone to attack Dr. Wright—then it’s been a spectacular failure. Not only was it exposed publicly by Crypto Leaks, but it also led to the firing of Kyle Roche and the forced rebrand of the Roche Freedman firm to Freedman Normand Friedland. Dr. Wright’s own project, BSV blockchain, is moving from strength to strength and setting records along the way, and Ava Labs is ‘resizing.’

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