The ‘crypto sheriff’ made lots of enemies. Then someone came after him

After he got over his initial shock, Roche realised he had a major problem on his hands. The videos made him look corrupt. To defend himself, he published a piece on Medium saying they had been “illegally obtained” and “spliced out of context,” and he denied being in cahoots with Ava Labs.

It was too late. One after another, companies that Roche Freedman had sued filed motions to disqualify the firm from their cases. In October, the first of those motions succeeded: A federal judge in New York tossed Roche Freedman from a case it had filed against Tether, the operator of the world’s most used “stablecoin.”

Within days, Roche was forced to resign from the law firm he had founded. With his career in tatters, he said, he enrolled in ethics classes and began to see a therapist.

Roche was felled by his own loose lips and his overly cozy relationship with a client. But he also was the victim of an elaborate international setup.

The question was: Who was behind it?

The new sheriff

Roche grew up in a working-class family in Buffalo, New York. The oldest of four siblings, he shared a bedroom with intellectually disabled twin brothers. Watching them struggle with simple tasks while he breezed through school made Roche feel both guilty and determined to succeed so he could one day provide for them.

After attending Purdue University and working for a few years as a management consultant, he enrolled at Northwestern University’s Pritzker School of Law. During his first semester, in the fall of 2013, he caught the crypto bug. Joe Delich, a classmate who later worked with Roche at his law firm, remembers him constantly checking the price of bitcoin on his laptop during classes. Roche cashed out before a big price drop, earning about $US100,000 ($147,000) in profits. He used the money to pay his tuition.

As a third-year student, Roche collaborated with a professor on a paper discussing bitcoin’s virtues as the first currency free from government interference. That led to an opinion piece in The Wall Street Journal.

“That was the first moment I thought, ‘Oh, wow, maybe I can do something with this,‘” he said.

By then, Roche was a first-year associate at Boies Schiller Flexner, where he was developing a reputation as the kid who understood crypto. When a colleague in Miami approached him a few days after the Journal piece with a bitcoin-related case, he jumped at the opportunity.

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The case pitted a man named Ira Kleiman against Craig Wright, an Australian computer scientist who claims to be bitcoin’s enigmatic creator, Satoshi Nakamoto. Kleiman wanted to sue Wright for defrauding his brother David, a paraplegic computer forensics expert who had died in his mid-40s, out of billions of dollars of bitcoin they supposedly mined together in bitcoin’s early days.

The facts were murky: There was evidence that Wright and David Kleiman had indeed been friends, and David Kleiman had been known to carry around his neck an encrypted hard drive that might or might not have contained the passwords to bitcoin wallets. But many people considered Wright a fraud, calling into question the notion that he had mined early blocks of bitcoin, much less cheated someone out of them.

To Roche, that was one of the allures of the case. If he could make Wright hand over his files during discovery, he might be able to solve bitcoin’s great enduring mystery: Satoshi Nakamoto’s true identity. Roche and his young Miami colleague, Velvel Freedman, were soon devoting most of their time to the case.

In 2019, with the Kleiman case slowly progressing toward a trial, Roche met a new client who was locked in a dispute with a crypto company. In a matter of days, he negotiated a lucrative settlement on the client’s behalf. As a token of his gratitude, the client agreed to invest $US7.5 million with Roche and Freedman so they could start their own law firm. At first, Roche set up shop in a coworking space in the New York City borough of Brooklyn, but when the pandemic hit he joined Freedman in Miami.

Their firm, Roche Freedman, soon made a splash. Roche had watched with increasing scepticism as a number of crypto startups rode bitcoin’s growing popularity by marketing new digital coins that surged in value and then crashed. It reminded him of pump-and-dump scams in which a group inflates the price of a stock by talking it up publicly before selling all at once and making off with the profits.

Regulators didn’t seem to be doing anything about it, so Roche decided he would. On April 3, 2020, Roche Freedman filed lawsuits seeking class-action status against seven issuers of digital coins, alleging they had pumped what amounted to unregistered securities with false statements and then dumped them, leaving retail investors holding the bag.

It also sued four crypto exchanges for enabling the coin issuers’ conduct, foreshadowing some of the legal arguments the Securities and Exchange Commission used to sue Binance and Coinbase this month. (Binance and Coinbase have vowed to fight the SEC in court.)

Those suits were just an opening salvo: Sixteen months later, Roche filed his biggest securities fraud case yet. It alleged that a British entrepreneur, Dominic Williams, and entities he controlled had swindled investors out of billions of dollars by aggressively promoting, and then dumping, a digital coin tied to a grandiose plan to revolutionise computing.

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Williams had boldly proclaimed that his Internet Computer blockchain — a decentralised network of computers powered by a digital token called ICP — would supplant the big cloud services offered by Amazon and Microsoft and become humanity’s primary computing platform. But after an initial surge that briefly made it one of the most valuable cryptocurrencies, ICP had plummeted 92 per cent — a collapse that Roche’s lawsuit attributed to “massive” selling by Williams and other insiders. (Williams denied the allegations.)

If crypto was the Wild West of finance, Roche had announced himself as the new sheriff. But sheriffs, as he would soon learn, make enemies.

A big verdict

Around the time Roche was working on his first pump-and-dump lawsuits, he befriended Emin Gun Sirer, a Cornell University computer science professor who was hatching a cryptocurrency project of his own in the Brooklyn coworking space where Roche initially worked. Roche agreed to do legal work for Sirer’s company, Ava Labs, in exchange for an equity stake and a small percentage of the cryptocurrency tokens it planned to issue.

A year later, Sirer’s blockchain, Avalanche, went live. As crypto fever spread, its AVAX tokens rocketed to more than $US100, making Roche a multimillionaire.

Roche’s compensation agreement with Ava Labs was supposed to be confidential, but anyone who wanted to gather intel on him would soon be able to find out about it. In February 2021, Roche Freedman fired one of its partners, Jason Cyrulnik. He hit back with a lawsuit that disclosed each partner’s share of the AVAX tokens.

That fall, Kleiman v. Wright went to trial in US District Court in Miami. Roche gave a fiery opening statement during which he repeatedly pointed an accusatory finger at Wright.

In the end, the trial didn’t resolve whether Wright had really invented bitcoin, but the jury ordered him to pay $US100 million in damages to a company Ira Kleiman had inherited from his dead brother. (The judge later tacked on $US43 million in interest.) Roche and Freedman toasted over cocktails at a Miami restaurant. Their law firm stood to make more than $US10 million.

With the Kleiman trial over, Roche turned to a project he and Sirer had been discussing: Ryval, a company that would help people raise money on Avalanche to pay for lawsuits. Roche saw it as a GoFundMe for litigation and thought it could level the legal playing field between individuals and big corporations.

But while he was plotting his new venture, someone was plotting his downfall.

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The setup

In December 2021, Roche received an email from someone he trusted introducing him to Villavicencio, according to a copy of the message reviewed by The New York Times. Villavicencio presented himself as an associate of Ager-Hanssen, a venture capitalist who was interested in Roche’s new project. Roche had no idea who the two men were, but he welcomed the approach: He was raising money for Ryval, which had received some attention in the crypto press.

After an introductory Zoom call, Roche agreed to fly to London at the men’s expense the next month.

They met at Ager-Hanssen’s townhouse office, where things soon took a strange turn: According to Roche, Ager-Hanssen pressed his index finger to Roche’s forehead — “I didn’t think it was a gun motion, but I thought he was trying to intimidate me” — and said that if he was going to invest with him, he needed to know everything Roche was capable of.

In hindsight, Roche wishes he had gotten up and left. Instead, he took it as a cue to sell himself harder. According to Roche, Ager-Hanssen spent the next couple of hours goading him into bragging about his relationship with Ava Labs while Villavicencio, who was sitting across a table from him, secretly filmed him.

If crypto was the Wild West of finance, Roche had announced himself as the new sheriff. But sheriffs, as he would soon learn, make enemies.

A week after the videos surfaced, Roche got another jolt: A friend of a colleague said he had heard rumours at a crypto event that Roche’s life was in danger, according to an affidavit later filed in court. Spooked, Roche and his fiancée hunkered down in a short-term rental in Brooklyn.

Roche felt that his world was unravelling. He says he became so stressed that he stopped eating and lost 10 pounds. After several weeks, he and his fiancée returned to Miami but, still worried for their safety, moved to an apartment leased under a relative’s name.

A series of clues

Plenty of people had reason to celebrate Roche’s downfall.

First in line were Wright, the man who claims to be Satoshi Nakamoto, and Calvin Ayre, a gambling tycoon who bankrolls Wright. Wright quickly sought to exploit the videos, filing an unsuccessful motion to disqualify Roche Freedman from the Kleiman case. After the videos came out, Ager-Hanssen became CEO of nChain, a company that Ayre funds and that employs Wright as chief science officer.

Through a spokesperson, Ayre acknowledged that he and Wright were “pleased” when the videos came out. But they denied having anything to do with the London sting.

Roche believes them because he thinks he knows who hired Ager-Hanssen: Williams, the British entrepreneur who was the target of Roche Freedman’s biggest pump-and-dump lawsuit.

A series of clues, documented by his former law firm in court filings, led Roche to that conclusion. The first is that on May 12, 2022, Williams wrote on Twitter that he was “coming for” his critics. That was the same day the cryptoleaks.info domain name was registered.

Then, on June 9, 2022, the Crypto Leaks website went live. Billing itself as the defender of “the honest crypto community,” it posted two reports that aligned with Williams’ interests. The first espoused a complicated theory about the ICP token crash that Williams had previously floated on Twitter.

The second attacked the Times for an article it had published about the crash. Williams tweeted a link to that Crypto Leaks report, calling it “Gobsmacking.” The Dfinity Foundation, a Swiss nonprofit that Williams created to oversee his blockchain, has since sued the Times for defamation in New York. The Times is seeking to dismiss the suit.

The videos of Roche were the crux of Crypto Leaks’ third exposé. After they were published, Williams and Dfinity filed a motion to disqualify Roche Freedman as plaintiffs’ counsel in the pump-and-dump lawsuit, saying Roche’s comments demonstrated “a disregard for the integrity of the judicial system.”

In court filings opposing the motion, Roche’s former firm accused Williams of being behind Crypto Leaks and said the videos filmed at Jean-Georges showed signs of deepfake alterations. It also blamed Williams for the rumoured death threats against Roche.

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Pete Padovano, a spokesperson for Dfinity and Williams, denied that anyone at the foundation had made death threats. Asked if he was connected to Crypto Leaks, Williams said, “We appreciate the coverage of Crypto Leaks and believe their articles speak for themselves.”

Roche spent last fall lying low, but he has recently begun to rebuild his career as a solo practitioner.

This article originally appeared in The New York Times.

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