Is the Dream of Decentralization Over?
Is the Dream of Decentralization Over?
Law firm is being accused of bringing high-profile class action suits against crypto firms and projects on behalf of Ava Labs.
If you look at 2022, it seems like we are aiming less and less toward true decentralization and more and more toward pseudo decentralization where DAOs are still namesake, crypto firms behind popular blockchains are getting sued, smart contracts are sanctioned as people, major blockchains are being accused of centralization and mere ideas of building a new chain are getting funded in 100s of millions by deep-pocketed VC firms.
Additionally, there are government-led crackdowns across the globe on crypto.
Yet the motto has been, builders keep building, a narrative to push us harder to aim for true independence from centralised platforms, take back control, etc.
What happens though if we find out a blockchain company possibly, secretly, worked with a law firm to attack its competition?
In a now infamous leak of videos, it appears that Kyle Roche, a founding partner of law firm Roche Freedman allegedly worked secretly with Ava Labs, an American for-profit company that develops and promotes the Avalanche blockchain to file several high-profile lawsuits against competing platforms and firms.
Ava Labs founder and CEO Emin Gün Sirer and Roche denied the allegations. Moreover, many on the internet are accusing Crypto Leaks of malice and claiming that all their leaks are posts written in favour of the Dfinity(ICP) blockchain. I think I will skip this part of the theory, because no matter the intent, the ultimate screwing over happens to retail investors.
As of this writing, after denying the allegations, Kyle Roche has filed to withdraw as counsel from several class action lawsuits against crypto-related businesses like Tether, Bitfinex, Tron, BitMex, Binance and Binance US. However, there is no update on lawsuits against Dfinity or Solana yet.
We did a Twitter space earlier and this is the edited recording of Anish and I discussing the issue.
The Allegations
In the series of videos, Kyle Roche can be heard saying that the law firm was paid to promote Ava Labs and ridicule its rivals like Dfinity and Solana. Roche says he made a deal with Ava Labs in September 2019 after meeting the Ava Labs team in the co-working space where he was working from as well. He claims to have received close to 1% of the total supply of Avalanche blockchain’s native token and stocks from Ava Labs.
According to Kyle, Ava labs CEO Emin Sirer used the litigation system to eliminate his competition. On July 1, 2022, Roche Freedman LLP filed a high-profile lawsuit against Solana Labs, Solana Foundation, and its co-founder Anatoly Yakovenko, alleging that Solana offered unregistered securities to American investors in violation of federal securities laws.
Kyle claims to have used a special tool in the US legal process called “discovery to demand access” to gain access to their confidential accounts, commercial data, email and social media communications. The confidential information shared by Kyle provided Ava labs with a competitive advantage over its rivals.
The Denials
Both Sirer and Roche have denied the allegations.
Roche put out a statement where he said the videos are “obtained illegally”, and are taken out of context. Crypto Leaks claims that the secret recordings were well within legal rights.
Sirer also posted a statement, where he denied the allegations and said any claims made by Roche were “false claims”. He said the relationship with the lawyer is not beyond his representation of the company in contract disputes and a personal libel case involving Sirer. He added that Roche does not have a 1% AVAX token supply.
Side note: So Roche does have some tokens?
The Aftermath
Kyle Roche filed to remove himself from multiple cases, citing that he is no longer with the firm's class action practice.
Now, Tether, the digital currency company wants a judge to remove Roche’s firm from the case entirely. According to a report on The Block, Tether’s lawyers said,
"The individual withdrawal of Mr. Roche, however, does little if anything to address the serious issues regarding the potential misuse of discovery and class action lawsuits generally,"… "Even if he is no longer counsel of record, he would still have access to discovery materials, would retain the ability to direct the conduct of other lawyers at his firm, and would profit from any potential recovery in this lawsuit."
Roche Freedman initiated the class action against firms Bitfinex and Tether in 2019, alleging over $1.4 trillion in damages suffered by plaintiffs.
Roche has filed to withdraw himself as counsel from the case against Binance US, which was initiated after Terra Luna Crash. Among other cases where Roche filed to withdraw himself include Tron, BitMex and Binance.
Where is Decentralization?
Whether or not these allegations are true, it does set a precedence for what the future may look like if blockchain firms try to conquer the market through unethical practices. I firmly believed up until now that the industry had healthy competition that brought out the best from each chain, but I may have been wrong.
I want to put across this tweet by fellow influencer and educator Kashif Raza. I agree with this point that this is exploitation.
If the projects are driven by founders and small teams, if the law firms can simply file litigations against crypto firms to deter them, if huge lenders and investors can go bankrupt and take down LPs and retail investors, where is the decentralization we were promised? Where is the power in the hands of the people?
Maybe it is time we hit a reset button and focus on the true principles, because builders keep building but who is going to benefit if they don’t build it with the community in mind?
That is all for today folks. Hope you enjoyed my rant cum informative letter. If you did, do throw in a like, share it on social media and if you want to chat, leave a comment.
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