On Monday, the AVAX token fell to its lowest level since July 13 after a self-described “whistleblower” website accused Ava Labs, the company behind the Avalanche Blockchain, of paying lawyers to harm competitors and keep regulators at bay.
On Friday, Crypto Leaks, a self-proclaimed whistleblower, published a report claiming that several years ago, New York-based Ava Labs, which was focused on developing Avalanche’s ecosystem, and law firm Roche Freedman struck a deal in which Freedman agreed to collect confidential information from rival companies and trap them in class-action lawsuits in exchange for massive amounts of AVAX tokens and Ava Labs corporate stock.
According to the report: We can disclose that the pact addresses Roche Freedman and their leader Kyle Roche, to do the following: 1. Utilize the American legal system – gangster style – to attack and harm Crypto organizations and projects that may contend with Ava Labs or Avalanche in some way, 2. Accuse Crypto industry actors generally to create magnets for regulators like the SEC and CFTC that divert them from the highly commercial nature of Ava Labs and the Avalanche Blockchain, and 3. Secretly pursue Emin Gün Sirer’s personal grudges against individuals.
According to CoinDesk data, AVAX has declined 22% from $23 to $17.90 since Friday, with prices falling 11% in the last 24 hours alone. As of this writing, AVAX was the only Cryptocurrency with a market cap of at least $1 billion to report a double-digit percentage drop for the 24 hours. At the time of publication, Bitcoin, Ether, and other major Cryptocurrencies were down 1% to 5%.
Ava Labs founder and CEO Emin Gün Sirer rejected the piece as “conspiracy theory nonsense.”
The report, on the other hand, has piqued the interest of industry insiders, with a few in the investor community calling the report disturbing and others wondering whether both parties will now face legal investigation for a perverse incentive relationship.
Meanwhile, Binance CEO Changpeng Zhao called the report “wild” in a now-deleted tweet, assuming the legitimacy of the evidence videos published by Crypto Leaks. Zhao stated that Binance was the target, although the centralized exchange is not a direct competitor of Avalanche.
Brad Garlinghouse, CEO of Ripple Labs, tweeted on Monday that he had never met or talked to (much less invested in) Kyle Roche, responding to the claims in the Crypto Leaks article that Garlinghouse had done so.
Because of the high transaction costs on the Ethereum Blockchain, Avalanche gained traction with other layers 1 Blockchains last year. AVAX increased by 3,300% in 2021, reaching record highs of more than $140.
The token peaked along with the broader market in November, as the Federal Reserve of the United States shifted its focus to inflation control and monetary tightening. Since then, the value of the Cryptocurrency market has fallen from $3 trillion to less than $1 trillion. Bitcoin, the most valuable Cryptocurrency by market capitalization, fell below $20,000 early Monday after reaching a record high of $69,000 in November.
