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
(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.
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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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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