Crypto law firm Roche Freedman fights to stay in bitcoin case after videos surface

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Rep­re­sen­ta­tions of Bit­coin and oth­er cryp­tocur­ren­cies on a screen show­ing bina­ry codes are seen through a mag­ni­fy­ing glass in this illus­tra­tion pic­ture tak­en Sep­tem­ber 27, 2021. REUTERS/Florence Lo/Illustration

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(Reuters) — A hot­ly con­test­ed dis­qual­i­fi­ca­tion fight at the 11th U.S. Cir­cuit Court of Appeals should pro­vide a good indi­ca­tion of just how much dam­age the cryp­to law firm Roche Freed­man is fac­ing after last month’s rev­e­la­tion of sur­rep­ti­tious video record­ings of name part­ner Kyle Roche.

The anony­mous web­site Cryp­to Leaks pub­lished video clips of Roche, a well-known cryp­to lit­i­ga­tor, last month. In the clips, as my Reuters col­league Jody Godoy has report­ed, Roche appears to boast of a lucra­tive finan­cial stake in blockchain com­pa­ny Ava Labs Inc and to sug­gest that he filed class actions against Ava com­peti­tors to ben­e­fit the blockchain com­pa­ny. Roche also seems in the video clips to dis­par­age class action plain­tiffs as “100,000 idiots out there” and to crit­i­cize jurors as “idiots.”

Roche, who did not respond to a query I sent to him and part­ner Velv­el Freed­man, has denied any improp­er lit­i­ga­tion con­duct, assert­ing in an Aug. 29 Medi­um post that the videos were ille­gal­ly record­ed by an oper­a­tive work­ing for a defen­dant in a class action filed by Roche Freed­man. Roche also said that the clips were selec­tive­ly edit­ed, that he was intox­i­cat­ed when the record­ings were made and that Ava had no say in Roche Freedman’s cryp­to class actions.

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The firm itself has acknowl­edged that Roche’s com­ments about class mem­bers and jurors were “inap­pro­pri­ate,” though it has also echoed Roche’s asser­tion that he was illic­it­ly taped in a “set-up orches­trat­ed by a defen­dant.” The firm con­tends that Roche’s boasts about using class action lit­i­ga­tion to fur­ther Ava’s inter­ests were “plain­ly false,” describ­ing Roche’s state­ments as a mis­guid­ed attempt to impress the pur­port­ed ven­ture cap­i­tal­ist he believed he was meet­ing with.

Roche Freed­man nev­er­the­less removed Roche from its class action prac­tice, includ­ing ongo­ing cas­es against sta­ble­coin cre­ator Teth­er Ltd and cryp­to exchange Bitfinex, cit­ing the “regret­table dis­trac­tion” the video­tapes have prompted.

That action has not appeased some crit­ics. Roche Freed­man is fac­ing calls for dis­qual­i­fi­ca­tion in the Teth­er case not just from defen­dants but also from its own co-coun­sel at Selendy Gay Els­berg and Schnei­der Wal­lace Cot­trell Konecky. U.S. Dis­trict Judge Kather­ine Polk Fail­la of Man­hat­tan has sched­uled an Oct. 3 hear­ing on the dis­qual­i­fi­ca­tion requests, which con­tend, among oth­er things, that Roche Freed­man’s con­tin­ued involve­ment in the class actions will bog down the lit­i­ga­tion in dis­cov­ery about Roche’s conduct.

But in the mean­time, Roche Freed­man is also fend­ing off a dis­qual­i­fi­ca­tion motion at the 11th Cir­cuit by Craig Wright, the self-pro­claimed Bit­coin inven­tor who was hit ear­li­er this year with a $143 mil­lion judg­ment in a case that Roche Freed­man lit­i­gat­ed on behalf of the estate of Wright’s one­time busi­ness part­ner David Kleiman. I’d argue that the out­come of the 11th Cir­cuit dis­qual­i­fi­ca­tion will tell us even more than the Teth­er case about the extent of dam­age to the firm from the Roche tapes.

Roche Free­man’s client, which sought hun­dreds of bil­lions of dol­lars from Wright, ini­ti­at­ed the 11th Cir­cuit appeal, despite obtain­ing a $143 mil­lion judg­ment from the tri­al court. Roche Freed­man and co-coun­sel from Boies Schiller Flexn­er argued in their open­ing brief that the tri­al judge com­mit­ted sev­er­al crit­i­cal errors before and dur­ing the 2021 tri­al against Wright, which end­ed with a $100 mil­lion jury ver­dict on one of the estate’s claims, but a defense ver­dict on a dozen oth­er demands. Wright has not cross-appealed the judgment.

The time­line is sig­nif­i­cant. Roche and Freed­man began rep­re­sent­ing the Kleiman estate back in 2018, before they even left Boies Schiller to found their own firm. Ava Labs did not exist when they first filed the estate’s suit against Wright. And accord­ing to Roche Freed­man, the two name part­ners were near­ly two years into the estate’s case against Wright before they were engaged to do any legal work for Ava.

So what does the Wright case have to do with Roche’s video­taped com­ments about his rela­tion­ship with Ava?

There’s just one direct link, accord­ing to the Sept. 6 dis­qual­i­fi­ca­tion motion filed by Wright lead lawyer Andrés Rivero of Rivero Mestre. Roche alleged­ly referred to Wright in one of the video clips at Cryp­to Leaks as a “neme­sis” of Ava’s founder, sug­gest­ing a motive to push hard against Wright. The dis­qual­i­fi­ca­tion motion also the­o­rized that Roche’s boast­ing about his own wealth sug­gests that he does not feel con­strained to put his clients’ inter­ests ahead of his own. In this case, Wright’s motion argued, Roche Freed­man blew up a poten­tial set­tle­ment that would have ben­e­fit­ed the estate.

But most­ly, the brief is an oppor­tu­ni­ty for Wright and Rivero to high­light Roche’s unsa­vory com­ments, includ­ing his asser­tion that jurors and class mem­bers are “idiots.” The fil­ing, in effect, invites the 11th Cir­cuit to join in Wright’s disapprobation.

“[Roche’s] admis­sions of wrong­do­ing demon­strate the firm’s unlaw­ful ‘busi­ness plan’ and its ongo­ing efforts to sub­vert the fair admin­is­tra­tion of jus­tice, which heap scorn and dis­re­pute upon the legal pro­fes­sion and every court (includ­ing this one) in which the firm has appeared,” Rivero argued.

Roche Freedman’s Sept. 19 response empha­sized that the Wright lit­i­ga­tion was well under way before Ava exist­ed and was tried to a ver­dict months before Roche was videotaped.

“Wright’s sug­ges­tion that this action was brought for an improp­er pur­pose defies log­ic,” Roche Freed­man said. “To state the obvi­ous, this action was brought because plain­tiffs — who have nev­er met any­one from and have no affil­i­a­tion with Ava Labs — believed in good faith that Wright con­vert­ed their valu­able bit­coin and blockchain-relat­ed intel­lec­tu­al property.”

Freed­man elab­o­rat­ed via an email response to the query I sent to him and Roche. “Wright’s motion is friv­o­lous,” he said. “While we under­stand he has a per­son­al ani­mus against the firm, we’d have hoped that wouldn’t be reflect­ed in his fil­ings. Unfor­tu­nate­ly, we were wrong.”

Wright coun­sel Rivero retort­ed: “Their response doesn’t even start to address their con­fessed misconduct.”

Freed­man said he does not expect oth­er Roche Freed­man adver­saries to fol­low Wright’s lead. I’ve been writ­ing about lit­i­ga­tion for long enough to pre­dict that if the 11th Cir­cuit grants Wright’s motion, despite the rel­a­tive­ly ten­u­ous con­nec­tion between Roche’s taped com­ments and his firm’s lit­i­ga­tion against Wright, we can expect Roche Freed­man oppo­nents to pile on with their own dis­qual­i­fi­ca­tion motions.

The 11th Cir­cuit motion is basi­cal­ly a test of whether judges can stom­ach Roche’s con­duct. If they can’t, Roche Freed­man could be in big trouble.

Read more:

Law firms seek to oust Roche Freed­man from Teth­er cryp­to case

Ver­dict against self-pro­claimed Bit­coin inven­tor bal­loons to $143 mln

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Opin­ions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Prin­ci­ples, is com­mit­ted to integri­ty, inde­pen­dence, and free­dom from bias.

Ali­son Frankel

Thom­son Reuters

Ali­son Frankel has cov­ered high-stakes com­mer­cial lit­i­ga­tion as a colum­nist for Reuters since 2011. A Dart­mouth col­lege grad­u­ate, she has worked as a jour­nal­ist in New York cov­er­ing the legal indus­try and the law for more than three decades. Before join­ing Reuters, she was a writer and edi­tor at The Amer­i­can Lawyer. Frankel is the author of Dou­ble Eagle: The Epic Sto­ry of the World’s Most Valu­able Coin. 

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