Ava Labs founder calls Crypto Leaks allegations ‘obvious nonsense’

Yahoo Finance’s David Hollerith joins the Live show to discuss a Crypto Leaks accuser’s allegations against Ava Labs.

Video transcript

BRIAN CHEUNG: Well, now to moves in the crypto space with Avalanche's Avax token recovering ground after slumping over 10%. Seeing some rebound today. Not all that much, though, after self-professed whistleblower website Crypto Leaks accused the blockchain's parent group Ava Labs of paying lawyers to hurt competitors. Yahoo Finance's David Hollerith here. David, what are the allegations here? It seems like it's a lot of he said, she said going on.

DAVID HOLLERITH: Yeah, that's right, Brian. And there are a few things going on. So the accuser Crypto Leak sprung up in early June. It's an anonymous publication with undisclosed backing that's more than likely supported by another player in the crypto space. And at best, it gathers information that relies on hidden camera video interviews that tease out sort of stories of crypto corruptions.

And it's in this latest report with Ava Labs, A nonprofit for the Avalanche blockchain, doesn't look good, regardless, given the video footage that's been seen. It caught enough attention, at least, to warrant responses from the accused and has also caused others in the sector to distance themselves.

So based on the hidden camera interview that is a part of the report, Avalanche Labs and Kyle Roche, partner with the law firm Roche Freeman, may have some sort of relationship that's sort of come under scrutiny and suspect. So the report essentially claims that Roche has filed a number of lawsuits since 2019 against Avalanche's competitor companies, Ava Labs competitor companies.

And the aim of the lawsuits has it been so much to prove legal wrongdoing as to access confidential competitor data during the legal discovery process in order to feed it back to Ava Labs and in general and in return for Avalanche tokens and corporate equity paid to Roche Freeman's lawyer, Kyle Roche.

In numerous statements published yesterday, Ava Labs and Kyle Roche have denied the accusations. Ava Labs, the founder and CEO, Emin Gun Sirer, has called the claims obvious nonsense, stating that the company has never received information from Roche and that Roche has only represented them in a defensive capacity. Roche, for his part, added largely the same thing, but also pointed out that the interview was obtained under false pretenses and that Roche was, in fact, intoxicated during the event. And the interview snippets were highly edited.

But either way, the video clips don't look good. And they don't portray either of the two companies in a positive light. Roche has filed numerous class action lawsuits in the crypto space. And he's dismissed several of them. But neither Ava Labs or Roche have filed a libel suit, which could tell us more about Crypto Leaks and what might be going on here. But in general, I'll just point out it's not unusual for law firms to take their pay from other companies in the form of corporate equity. And in the crypto space, that often means crypto tokens, too.

But there's still obviously this underlying evidence that we have seen from the video clips, which sort of point to the relationship between the two firms and, in general, how crypto companies might be using litigation and the media to disrupt their competition. Brian.

BRIAN CHEUNG: Yeah, an important reminder there that, I guess, the courts might be the arbiter in this growing space as well. Yahoo Finance's David Hollerith, thanks so much.