Roche Freedman kicked off Tether lawsuit by New York judge

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The judge hearing Roche Freedman’s class action market manipulation suit against Tether and Bitfinex has ordered that the firm be kicked off the case in a hearing Thursday.

The decision, made by New York District Court Judge Katherine Polk Failla, comes as a result of explosive leaked videos showing Roche Freedman partner Kyle Roche bragging about using straw plaintiffs to launch lawsuits against crypto companies—and in particular competitors of Ava Labs, a company in which Roche Freedman’s partners hold a considerable financial stake.

Judge Failla in delivering the decision said that the firm’s continued presence on the case is “not in the best interests of the class” and that the filmed admissions are “too detailed to dismiss out of hand.”

Roche Freedman’s disqualification was originally demanded by the defendants in the case (Tether, Bitfinex and Bittrex) as well as the firm’s co-counsel representing the plaintiffs (firms Selendy Gay Elsberg and Schneider Wallace). Debevoise and Plimpton, who represent Tether and Bitfinex, argued to the court that the leaks raised ‘grave concerns’ about Roche Freedman’s motivations in filing the suit and in particular, whether the firm can be trusted to properly deal with confidential information revealed in the case given Kyle Roche’s braggadocio.

In an effort to fend off the rapidly mounting criticism, Roche Freedman told the court that Roche was no longer on the firm’s class action practice. In addition, Kyle Roche himself published a response which claims that the person responsible for filming the leaked videos had gotten Roche drunk and characterized the leaks as a brazen attempt at intimidation.

This was not enough for Tether and Bitfinex, who subsequently demanded that the firm be removed from the case entirely—a request that has now been granted.

Nor will it be enough for the many other defendants currently being sued in actions brought by the firm. Judge Failla’s ruling is an ill omen for similar requests to have Roche Freedman booted in those cases, including a request by Dr. Craig Wright to have the firm kicked off the Kleiman v Wright case, which is currently under appeal. Dr Wright’s name was one of the few mentioned specifically by Roche as an enemy of Ava Labs’ founder, Emin Gün Sirer.

Things could go from bad to worse for Roche Freedman as more of their counterparties as well as current and former clients begin to digest Roche’s admissions. One of these counterparties, the Tulip Trust, is suing Ira Kleiman over his decision to use a company W&K to sue Craig Wright, one of its owners. But not only is the Tulip Trust asking that Roche Freedman be kicked off the case, they’re seeking discovery: at the end of September, they filed a motion demanding that the firm turn over all documents relating to its relationship with Ava Labs, including any relating to attempts by Roche Freedman to use ‘straw plaintiffs’ to attack and direct regulatory attention to its competitors.

The request—and any others that may be coming from Roche Freedman’s former clients and counterparties—may show if Kyle Roche’s admitted impropriety is just the tip of the iceberg.

Watch: Calvin Ayre: Courts could rule on “consumer fraud” of cryptos that claim to be Bitcoin