Ava Labs team kicks into damage control following Crypto Leaks allegations

By I-HODL | A Crypto Journey | 29 Aug 2022


The value of the layer 1 Avalanche token, AVAX, has been on a pretty wild seesaw these past 24 hours, following allegations by self-proclaimed whistleblower Crypto Leaks that crypto lawyer Roche Freedman was paid a handsome sum in tokens and equity to file class-action lawsuits against Avalanche's competitors in an attempt to gain non-public insight and harm those projects. All of this while your neighborhood busybody (yours truly if you're wondering) was out enjoying Sunday mimosas while incidentally also holding a bit of AVAX. 

Yup, this one caught me sleeping like those Ethiopian pilots who reportedly fell asleep midflight, missed their landing, and had to spin the block a couple times earlier this month, thankfully eventually landing with everyone safe on board. I woke up this morning to a coin that had plummeted more than 11% on reports of shady business dealings.

But let's get into this wild story, all right?

According to reports, the price of AVAX took a nose dive after Crypto Leaks released a report on Friday August 26th alleging that Avalanche development company Ava Labs had allocated 1% of the AVAX token supply and Ava Labs stock to Roche Freedman as payment for his firm to file class action lawsuits against its competitors. See? And I was all caught up on the Fed comments about inflation around the same time.

I did get a chance to read the report today though and, suffice to say, with an opening that highlighted Ava Labs' connection to failed hedge fund Three Arrows Capital now accused of "acting like a Ponzi scheme", the Crypto Leaks report pulled no punches. The report also notes that Roche Freedman has 25 class action lawsuits currently running against Binance and Avalanche competitors, Solana Labs and the Dfinity Foundation. Incidentally, great visibility for Dfinity here, I haven't been checking for them before. But anyhoo...

Crypto Leaks accuses Ava Labs and Roche Freedman of operating according to a secret pact that "harms the crypto industry, and has a nature so perverse that it undermines the integrity of the American legal system", claiming that the alleged deal between the two is now worth hundreds of millions of dollars. 

"We can reveal that the pact directs Roche Freedman and their leader Kyle Roche, to: 1) use the American legal system - gangster style - to attack and harm crypto organizations and projects that might compete with Ava Labs or Avalanche in some way, 2) sue crypto industry actors generally with the aim of creating magnets for regulators such as the SEC and CFTC that distract them from the highly commercial nature of Ava Labs and the Avalanche blockchain...," the report stated before following up the allegations with a video. Ouch.

The allegations have, of course, been refuted by Ava Labs CEO Emin Gün Sirer, but you know what they say about the way bad news and rumors travel, right? They travel at the speed of light.

In an article published on Medium, Sirer rubbished the claims, stating, "Neither I, nor anyone else at Ava Labs ever directed Roche in his selection of cases. We do not receive materials or information from him, and we do not entrust our legal affairs to him."

Adding that his team believed in what they were building, and did not need secret pacts or behind-the-scenes intrigue, Sirer added, "We will carry on building and otherwise working hard for the blockchain community. We encourage everyone to put aside pettiness, personal attacks, and fraudulent lies. Let’s keep building together.

On Twitter, Sirer also denied the report's claim that Roche held 1% of AVAX token supply and Ava Labs' stock.

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In his response also on Medium, Roche described the video clips as illegally obtained, highly edited, and not presented with accurate context. 

And at risk of splicing the context of his comments here, he said, "We vigorously deny any allegations of impropriety."

Wow, friends, this is a lot. And I hate to say this but I am not a disinterested party. So tell me, what are your thoughts? From where I sit, Up Only co-host Cobie sums it up nicely in his tweet:

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But tell me, who are you rooting for on this one- if any party at all? Do you think Ava Labs is guilty? If not, do you think the team's damage control efforts will be enough? Do you think this is a case of Dfinity entrapment as alleged by the lawyer? A lot of mud's been slinging, guys.

It's certainly going to be a story to watch in the coming days and weeks ahead, but as a trader, at the moment, I'm weighing my options- going against the tide and buying at discount or giving in to the FUD and getting out while I still can. Incidentally, for context, at the time of this article, AVAX had recovered some lost ground and was trading at a 4% loss for the past 24 hours. 

Well, friends, that's it for today. I hope you had a great weekend. Let's continue to catch up on the news together in the week ahead, all right? Until we meet again, thanks for stopping by, thank you so much for your support, be safe, and we'll chat soon.

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I-HODL
I-HODL

Your friendly, neighborhood crypto enthusiast.


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