Attorney McDonough Discusses Alleged Misdoing of Crypto Lawyer

New York attorney Kyle Roche of Roche Freedman faces allegations of ethical violations over his work in class actions against cryptocurrency companies. In August 2022, a video released on the anonymous website Crypto Leaks featured Roche explaining, inter alia, his financial motivation to sue the competitors of the crypto startup Ava Labs, which he represents, even where there is no legal basis to do so. Rather, he uses these baseless lawsuits against competitors as a tactic solely for the benefit of his client.

A September 2022 article by The American Lawyer that outlined the potential wrongdoing included insight from Attorney Chris McDonough, an experienced disciplinary defense lawyer at Foley Griffin in Nassau County.

Potential Issues with Grievance Authorities and Courts

The content of the video and other information could lead to Roche facing issues with grievance authorities and courts for violating the New York Rules of Professional Conduct, McDonough said. The alleged misconduct includes the frivolous use of the legal system, not informing clients about potential conflicts of interest, and not putting client interests first when evaluating settlement opportunities.

“Putting the interests of one client above the interests of another client [class action clients] is an impermissible conflict,” McDonough said in the article. “So too is putting his personal and business financial interest in helping Ava above his class action client’s interests.”

Roche Freedman denies that Roche violated any ethics rules.

Leaked Videos Prompt Questions about Attorney Conduct

In the leaked videos, Roche describes his strategy for suing Ava Labs’ competitors on behalf of class action plaintiffs while spurring regulators to investigate those competitors. The class actions allege that Ava Labs’ competitors issue illegal securities and commit antitrust violations.

Roche’s alleged professional misconduct includes using class action suits to damage Ava Labs’ competitors. While the members of the class are technically the client, Roche would drive the lawsuit according to what is best for Ava Labs, not necessarily the client of record. Ava Labs is a Roche Freedman client, paying the firm substantial fees in digital assets.

Roche reportedly owns tokens and equity in Ava Labs. His financial interest in the company was potentially never disclosed in writing to the class action clients.

A lack of disclosure could amount to “dishonesty, fraud, deceit or misrepresentation,” McDonough said. Lawyers have a fiduciary duty to disclose material conflicts of interest to their clients.

Roche’s law firm responded by saying he made “inappropriate remarks” and “untrue statements” on the video. The law firm denied a conflict of interest exists in the class actions. Roche accused the person appearing in the video of working for a defendant in one of his class actions.

Intriguing Details Emerge

The American Lawyer article outlines details that paint an interesting picture.

  • Kyle Roche and Devin “Velvel” Freedman left Boies Schiller Flexner in 2019 to found their firm Roche Freedman.
  • They began their law firm in a co-working space they shared with Ava Labs.
  • One week after Ava Labs began paying Roche Freedman in digital assets, founder Roche began suing crypto competitors in class action lawsuits filed on behalf of retail investors.
  • Roche said in the video that he owns 1% of Ava Labs’ cryptocurrency tokens called AVAX and 1% equity in Ava Labs.
  • He said he helps control the supply of AVAX tokens.
  • More attorneys left Boies Schiller Flexner to join Roche Freedman, including Jason Cyrulnik who sued the founders in 2021 for ousting him to separate him from his share of AVAX tokens.

Freedman Roche said Ava Labs and AVAX ownership does not represent a conflict of interest and Roche’s financial interest was not problematic because opposing counsel did not demonstrate that it presented a “significant risk” to the lawyer’s judgment on behalf of his clients.

Roche’s law firm removed him from its class action practice. He has been directed to attend ethics training. Roche has also filed motions to withdraw himself from class actions against crypto players. The defending companies also have asked judges to remove the Roche Freedman law firm entirely.

About Attorney Chris McDonough

McDonough has extensive experience defending lawyers facing the grievance committees for all New York judicial districts or disciplinary proceedings in all New York judicial departments. He has represented hundreds of law students and former lawyers seeking admission or readmission. McDonough is an adjunct professor of legal ethics, has authored numerous articles and reviews, and is a lecturer for bar associations, law school classes, and law firms. He earned his Juris Doctor in 1988.

About Foley Griffin

Foley Griffin was founded in Nassau County in 1997 dedicated to defending clients in criminal cases and fighting for fair compensation for injury victims. Our intentionally light caseload enables us to give each client the attention and high level of service they deserve.

Whether you are suspected of a crime or have been hurt in an accident caused by someone else, our skilled litigators are here to help. Contact us online or call (888) 966-8480 to schedule a free consultation.

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