The cryptocurrency market was hit with bearish volatility eroding tremendous wealth from the market. On Monday, while the largest cryptocurrency, Bitcoin, noted only a 0.8% drop, AVAX, the 17th largest altcoin by market capitalization, was at its lowest since mid-July. The crypto asset registered a 10.4% drop over the past 24 hours. Meanwhile, its weekly losses stood at 21.6%, according to data provided by Coingecko.
This price drop can be associated with the visible market-wide fall, but there was more than one reason for AVAX to take such a big tumble.
Whistleblower and AVAX
On Friday, a well-known whistleblower “Crypto Leaks,” reported that some years ago, New York-based Ava Labs focused on developing Avalanche’s ecosystem and Law firm Roche Freedman made a deal, under which the latter would collect confidential information of rival companies and trap them under class action lawsuits in return for massive amounts of AVAX tokens and Ava Labs corporate stock.
The report read,
“We can reveal that the pact directs Roche Freedman and their leader Kyle Roche, to 1) use the American legal system – gangster style – to attack and harm crypto organizations and projects that might compete with Ava Labs or Avalanche in some way, 2) sue crypto industry actors generally with the aim of creating magnets for regulators such as the SEC and CFTC that distract them from the highly commercial nature of Ava Labs and the Avalanche blockchain, and 3) secretly pursue Emin Gün Sirer’s personal vendettas against individuals.“
The competitors for Ava Labs were Solana Labs and Dfinity Foundation; however, Freedman holds a reputation for suing people in crypto, according to the whistleblower. The law firm was currently running at least 25 class actions, including the crypto exchange giant Binance.
According to a Press Release shared on 17th June, Roche Freedman LLP and Dontzin Nagy & Fleissig LLP “filed a class action lawsuit on June 15, 2022, on behalf of investors in the crypto-asset “UST” against BAM Trading Services Inc. (“Binance U.S.”), as well as Binance U.S.’s CEO Brian Shroder, alleging that Binance U.S. violated federal and state securities laws when it sold UST to investors beginning on or around April 13, 2022.”
Aftermath of the Report
After the publication of this report, the community was taken aback, and the panic was visible as the value of AVAX started to stumble. The digital asset dropped at least 22% from $23 to $17.90 on Friday. At press time, AVAX’s losses ran deep as it exchanged hands at $18.08 with a visual effort to hold the price.
Although the Bitcoin fall did trigger another spree of losses among altcoins, AVAX was the only one with a market cap above $1 billion to witness a double digital loss in 24 hours.
The founder of AVA labs and CEO, Emin Gün Sirer, called the report “conspiracy theory nonsense.” He also stated that they would “never engage in the unlawful, unethical and just plain wrong behavior claimed in these self-serving videos and inflammatory article. Our tech & team speak for themselves.”
However, many in the crypto community were not buying the CEO’s words. Among these was Terra whistleblower FatMan.
While the CEO questioned the basis of the community believing in this so-called “Conspiracy,” a Twitter user offered one such instance wherein Sirer retweeted Kyle Roche’s tweet about an October 2019 class action lawsuit filed by the law firm against Tether and Bitfinex and others, “for manipulating the cryptocurrency market to create the largest bubble in history.”
Adding to this was Avalanche’s Tweet on 14th December 2020, where it introduced the “Initial litigation Offering” [ILO].
Others dragged in the report were the likes of Ripple CEO Brad Garlinhouse. According to the report, Kyle Roche was a part of the law firm Boies Schiller Flexner, representing Ripple in the XRP vs the SEC lawsuit. However, on Monday, Garlinghouse clarified of “never” meeting or speaking to Kyle Roche.
Avalanche’s journey ahead could get tougher as it gained popularity merely last year.