Risk Update

Lawyer Conflicts Controversies — Block Reverted (Crypto Conflict Called), Sanction Request + Strategic DQ Accusation

Posted Dan Bressler

“Roche Firm Booted From Tether Action After Crypto Leaks Post” —

  • “A New York judge on Thursday removed Roche Freedman from representing plaintiffs in a class action that accuses the crypto exchange Bitfinex and Tether, the issuer of the USDT stablecoin, of market manipulation.”
  • “The decision is a blow for Roche Freedman after videos posted on a website called Crypto Leaks showed founding partner Kyle Roche boasting about the law firm’s relationship with the crypto startup Ava Labs.”
  • “Allowing the firm to continue serving as counsel ‘with the metaphorical baggage they now carry is not in the best interests of the class,’ Failla said.”
  • “During an Oct. 3 hearing, Failla called Roche’s comments ‘uniquely stupid’ and pressed co-founder Devin ‘Velvel’ Freedman on the firm’s conduct while litigating the 2019 lawsuit.”
  • “Roche has denied his firm has used litigation to target Ava Labs competitors. Ava Labs CEO Emin Gün Sirer has also said that the videos posted on Crypto Leaks showed Roche making false statements about their relationship.”
  • “Following the disclosure of the recordings in August, Roche’s firm kicked him off its class action practice and barred him from participating in ongoing class matters. Freedman argued that it took such steps to protect against the appearance of impropriety.”
  • “Still, Bitfinex and Tether moved to terminate Roche Freedman from the case, claiming the comments raised concerns about the firm’s motivations. Roche Freedman’s co-counsel, meanwhile, argued that booting the firm would eliminate a distraction.”
  • “Roche Freedman faces disqualification motions in at least four other cases, according to federal court filings.”
  • “A different New York judge has scheduled a Friday hearing in an action the firm brought on behalf of investors against the Tron Foundation, the company behind the TRON blockchain protocol.”
  • “Launched in 2019 by expats of the prominent litigation shop Boies Schiller, Roche Freedman has become one of the most active firms in the cryptocurrency class action space.”

More on this: “Crypto Leaks Risks Roche Freedman Losing More Class Action Work.”

“Recruiter Wants DLA Piper Sanctioned In Trade Secret Case” —

  • “A legal recruiting firm that recently won a $3.6 million judgment against an ex-employee for trade secrets theft wants DLA Piper and Tauler Smith LLP sanctioned for their role in what it calls an ‘exceptional’ case of ‘unreasonable and vexatious’ litigation. “
  • “Those efforts included avoiding discovery obligations, raising frivolous arguments to disqualify MWK’s attorney, adding unconnected parties to the case, and bringing time-barred and inadequately pled counterclaims that were ‘designed to embarrass and harass the plaintiffs,’ said MWK, which is now known as Counsel Holdings Inc., according to the filing.”
  • “DLA Piper pushed back against the allegations in the sanctions motion on Tuesday. ‘DLA Piper vigorously denies the assertion that its representation of Mr. Jowers was in any way improper or would warrant the imposition of sanctions,’ said Fields Alexander of Beck Redden LLP, counsel for DLA Piper, in a statement. ‘As this matter involves ongoing litigation, DLA Piper declines to respond further at this time.'”

DQ-related allegations made in the filing:

  • “Along the way, to raise costs and vexation, DLA Piper raised frivolous arguments to obtain a disqualification of Robert Kinney (“Kinney”) from serving as pretrial counsel to Plaintiff. When that failed, DLA Piper sought to block Kinney from seeing documents by over-designating thousands of them (even public websites) as AEO, adding a separate defamation case in Hong Kong that was factually and legally intertwined with the issues before the Court (but could not be handled by Plaintiff’s US legal team), and pursuing discovery against current and former employees of Plaintiff with no intention of or basis for ever using that discovery at trial.”
  • “DLA Piper sought to disqualify Kinney solely to raise costs.”
  • “[DLA Piper Lawer] Jowers’s statement to the Court admitted the reason for this effort. Jowers said that losing in the DQ effort was the ‘key watershed moment of this litigation…because Kinney would not have continued his litigation…if he lost his leverage of paying no attorneys fees.'”
  • “Because Jowers has admitted the purpose of the disqualification effort was to increase costs for his adversaries, the repetitive motions to disqualify further demonstrate bad faith and multiplication of the proceeding.”