Crypto leaks Comments from partner “Uniquely stupid,” says judge

A New York judge on Monday called a Roche Freedman co-founding partner’s leaked comments boasting of the firm’s relationship with a crypto startup “uniquely stupid.”

Katherine Polk Failla, a US District Judge for the Southern District of New York, also expressed concern about the firm’s motivations for filing a class action lawsuit accusing crypto exchange Bitfinex and affiliate Tether of market manipulation.

She said she will decide within a week whether to disqualify the firm from representing plaintiffs in the case.

Monday’s hearing came more than a month after a website called Crypto Leaks released recordings of the firm’s co-founder Kyle Roche discussing a close relationship with Ava Labs, a blockchain developer. Roche has denied allegations that his firm has used litigation to target Ava Labs competitors.

The recordings also showed Roche making disparaging remarks about class members in general and jurors.

After the leak, the defendant and Roche Freedman’s co-lead counsel – the law firms Selendy Gay Elsberg and Schneider Wallace – filed motions to have the firm removed from the case. Another plaintiff firm also urged Failla to reconsider his 2020 appointment as lead counsel in the case.

At the hearing, Roche Freedman’s naming partner, Devin Freedman, acknowledged that Roche’s comments were “stupid,” but he argued that there is no evidence to support a charge that the firm filed a lawsuit to help Ava Labs.

He argued that the leaks were orchestrated by a defendant, whom he did not name, in a separate action, and that the firm should remain counsel because it has the most expertise on the underlying issues.

Freedman said he and Roche began working on the lawsuit before Ava Labs even existed. To guard against any apparent impropriety, Roche has been fired from the firm’s class-action practice and “barred” from all existing class-action lawsuits, Freedman said.

Lawyers for Bitfinex and Tether argued that the steps were not enough, arguing that the videos raised serious concerns about whether the firm abused the discovery process.

Selendy Gay Elsberg and Schneider Wallace also asked that the firm be removed from the case, arguing that it would eliminate a “distraction” created by the footage.

However, the firms said they would have no problem working with Roche Freedman if the store remained on the case.

Expats from prominent litigation firm Boies Schiller started Roche Freedman in 2019 and now has 25 lawyers in New York, Miami and Boston.

The firm, among the most active in crypto class action litigation, has filed more than a dozen lawsuits against crypto exchanges and token issuers on behalf of investors and has served as lead counsel in many of them.

The lawsuit against Bitfinex and Tether alleges that they were part of a scheme to manipulate the cryptocurrency market and defraud investors. Some of the requirements survived a motion to dismiss in 2021.

Named plaintiffs in the Bitfinex/Tether action filed affidavits in September saying they wanted to continue to be represented by Roche Freedman.