Avalanche's AVAX Token Shows Stability as $130 Million Token Unlock Approaches
The $491 billion health care fund managed by KKR was tokenized on Avalanche
What the Avalanche Whistleblower Report Means
Ava Labs, the company that made the Avalanche blockchain and the AVAX token, is getting a lot of criticism after a supposed investigation report showed that the company allegedly set up a series of class-action lawsuits to hurt competitors.
On August 26, a site called Crypto Leaks, which claims to be a whistleblower, posted a long story saying that Ava Labs paid the crypto-focused law firm Freedman Roche in tokens and equity to file this lawsuit against them. The CEO of Ava, Emin Gün Sirer, has said that the claims are "absolutely false."
The post has short, secretly recorded videos of the law firm's founder, Kyle Roche, talking about how he used the U.S. legal system to protect Avalanche's interests by drawing regulatory attention to alternative layer 1 blockchains like Solana and Dfinity. He also talked about how close he was professionally and personally to Ava and its founders, as well as how much money he had in Avalanche.
If the report is true, it shows that anti-competitive behavior is still going strong in the crypto world. But there are a number of reasons to be skeptical about the claims. Right now, the search for the truth has reached a "he said, she said" stage, where it seems like everyone is hiding some facts, which hurts the reputation of crypto.
The main claims of the investigation, like that Ava used the legal system as a weapon, cannot be disproven by a third party and need to be checked out more. But there is clear bias in some parts of the report. Whether or not you think that turns reporting into smear campaigns is up to you, but there are clear problems with the facts.
When deciding if something is true or not, small facts are important. I think it's important that Crypto Leak's investigation had to be changed to take into account the fact that Gün Sirer, a former professor at Cornell, had left the school. This was made public months ago, when the computer scientist decided to spend all of his time on his own projects.
Also, this update says that Gün Sirer may have left under shady circumstances, which is not true. This is important because the whistleblower is putting together a profile of Gün Sirer, who is said to be angry that he didn't get tenure, to have "Satoshi envy," and possibly to be "a sociopath."
You can't blame a whistleblower for being over the top. But instead of relying on the actual spy-cam footage, it uses other pieces of evidence that make it less likely to be true. The reporter thinks it's important that Roche hasn't changed his LinkedIn page to show that he lives in Miami or that he works for Ava Labs. This could be a way for him to avoid paying taxes.
When small examples of biased reasoning add up, they should raise questions. But for the same reason, you have to be skeptical of Ava's immediate defense, which depends on the investigation being paid for by a competing blockchain project, Dfinity. (Roche Freedman has sued an organization with ties to Dfinity for "security violations" and trading on inside information.)
There are hints that "The Internet Computer" and Crypto Leaks are connected, such as the fact that "The Internet Computer's" previous reports were defenses of Dfinity against Solana and the New York Times, but there are no clear financial flows.
It's also important that Ava Labs, Emin Gün Sirer, and Roche haven't mentioned Ava's help with Roche's "tokenized litigation" platform Ryval in their answers to the investigation. This goes against claims that Ava only worked with the law firm when it was just starting out. The platform was made to put lawsuits on a blockchain so that people could invest in how the cases turned out. It got public support from Ava Labs in late 2020.
We're left with a series of videos that were shot by an unknown person and got to us in an unknown way. These videos show a lawyer making boastful claims about his practice and peers. We have a lawyer who says he was tricked and "intoxicated" by a Norwegian venture capitalist and cryptocurrency founder who is trying to hide his connection to the lawyer.
Both Roche and Emin Gün Sirer have said that Ava Labs didn't know about Roche's "plaintiff side practice," but that doesn't mean they weren't more connected than they say. But you have to wonder what good it would do for Ava or Roche to go through with their plans to sue Binance or other cryptocurrency exchanges like Coinbase (COIN) and Kraken?
What Roche says speaks for itself. He sued "for fun" and to get inside information, which only came out when he talked too much. And he probably ruined his career and his reputation by getting himself into this mess. Even if he was tricked into talking under false pretenses, he can't say that he didn't appear on film for several days.
Then there's the question of strategy: Did Ava really think that getting regulators to look into their competitors for securities violations would help them in the long run, even though they were basically running the same token game? Everything about the situation points to self-cannibalism, including the possibility that Dfinity is paying for smear campaigns against its competitors.
Of course, all of this is just guesswork based on guesswork. Of course, lawyers don't always do what's best for their clients. And, of course, not all crypto projects act with honor and class. In this dirty little drama, no claims seem impossible.
As the story goes on, more details will become clear. Question it all. Even if Avalanche paid lawyers to attack its competitors in an unethical way, the project is bigger than the people behind it, who might win no matter what. AVAX fell 11% during the trading day on Monday, but it has since come back a lot.
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