Last Updated on October 15, 2022 by Bitfinsider
On Thursday, a judge in the Southern District of New York disqualified Roche Freedman from representing the plaintiffs in a class action lawsuit that alleges the cryptocurrency exchange Bitfinex and Tether, the issuer of the USDT stablecoin, manipulated the market.
The decision is a setback for Roche Freedman, which was dealt the blow after videos showing founding partner Kyle Roche bragging about the law firm’s relationship with the cryptocurrency startup Ava Labs were published on a website with the name Crypto Leaks.
During a hearing on Thursday, a United States District Judge for the Southern District of New York named Katherine Polk Failla stated that the firm’s continued participation in the case could cause the litigation to be thrown off track. She indicated that she would change her initial appointment as lead counsel in order to remove the firm.
Failla stated that it would not be in the best interests of the class to allow the firm to continue serving as counsel “with the metaphorical baggage they now carry.”
A request for comment was sent to Roche Freedman, but she did not immediately respond.
During a hearing that took place on October 3, 2018, Failla referred to Roche’s comments as “uniquely stupid” and questioned the firm’s co-founder, Devin “Velvel” Freedman, about its behavior during the litigation of the 2019 lawsuit.
Freedman referred to Roche’s statements as “stupid,” but argued that there was no evidence that Roche Freedman brought a lawsuit to assist Ava Labs and that concerns about the law firm abusing discovery were unfounded. Freedman also stated that concerns about the law firm abusing discovery were unfounded.
The law firms Selendy Gay Elsberg and Schneider Wallace will continue to serve as lead counsel for the proposed class action lawsuit that alleges the defendants manipulated prices. The lawsuit is being brought against the defendants.
Roche has denied that his company has used litigation to target other businesses in the Ava Labs industry. The Chief Executive Officer of Ava Labs, Emin Gün Sirer, has stated that the videos that were published on Crypto Leaks showed Roche making false statements about the company’s relationship with Ava Labs.
After the recordings were made public in August, Roche’s law firm terminated his employment in the class action practice and prohibited him from taking part in any pending or future cases involving class actions. According to Freedman’s argument, these precautions were taken to avoid giving the appearance of improper behavior.
Despite this, Bitfinex and Tether made a motion to have Roche Freedman removed from the case on the grounds that the comments raised questions about the company’s objectives. In the meantime, the co-counsel for Roche Freedman argued that getting rid of the firm would remove a source of distraction.
A separate plaintiffs firm filed a motion to substitute Roche Freedman as lead counsel, but Failla on Thursday rejected that application.
Roche Freedman faces disqualification motions in at least four other cases, according to federal court filings.
An action that was brought on behalf of investors against the Tron Foundation, the company that is behind the TRON blockchain protocol, will have its hearing moved to this coming Friday before a different judge in the state of New York.
Roche Freedman, which was established in 2019 by former employees of the well-known litigation firm Boies Schiller, has quickly become one of the most active law firms operating in the cryptocurrency class action space.
The company argued that it had the most expertise in digital assets and that Roche’s “false comments” should not bring the rest of the firm into disrepute. As a result, the company was granted lead counsel status in the action brought against Bitfinex and Tether in the year 2020.
During the hearing that took place on October 3, Freedman also asserted that a defendant in one of the lawsuits that the firm brought was the person who was responsible for recording Roche covertly.
On the other hand, according to Failla, Roche’s comments were “too detailed to dismiss out of hand.” She came to the conclusion that the elimination of the law firm would not result in a decrease in the quality of the legal representation provided to the putative class.
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