The rising acceptance of cryptocurrency—and its skyrocketing worth—are fueling a authorized battle amongst founders of a boutique regulation agency in New York and Miami.
Jason Cyrulnik, a former fairness companion at Boies Schiller Flexner, in January 2020 was one of 15 lawyers to start the law firm, Roche Cyrulnik Freedman, which accepted cryptocurrency as a cost for its providers.
Greater than a 12 months later, Cyrulnik is battling the agency’s different two co-founders in courtroom, alleging they’re making an attempt to grab his $60 million share of a cryptocurrency asset—a bounty whose worth he claims in courtroom papers has lately spiked to $250 million.
“I’ve by no means seen a extra egregious scheme,” Cyrulnik’s lawyer, Marc Kasowitz, stated in a press release. Kasowitz declined to debate the id of the cryptocurrency asset.
The drama reveals the unintended downstream penalties companies can face once they embrace the rising recognition of digital currencies. The District of Columbia Bar recently joined bars in New York Metropolis and North Carolina that accredited bitcoin and different cryptocurrency funds in return for authorized providers.
“Legal professionals are permitted to take all types of issues for funds, even when the worth of these issues adjustments over time,” stated Noah Fiedler, who represents attorneys accused of ethics violations along with serving as partner-in-charge of Hinshaw & Culbertson’s Milwaukee workplace.
In a complaint filed Tuesday in a state courtroom in Miami, Cyrulnik claims his now former companions voted to eject him from Roche Cyrulnik Freedman final month in an unlawful scheme to strip him of the agency’s newfound largesse.
The agency, which has renamed itself Roche Freedman, claims it ejected Cyrulnik after he was abusive to colleagues and violated the phrases of a memorandum of understanding dividing its earnings.
Roche Freedman filed a lawsuit Feb. 27 against Cyrulnik in New York after he refused to go away the agency. A pretrial convention within the case is ready for June 9.
Title companions Kyle Roche and Velvel “Devin” Freedman didn’t reply to requests for remark concerning the fallout involving their former companion.
Fiedler, the ethics skilled, stated paying an lawyer in cryptocurrency is much like paying a lawyer in company stock.
“The issue with crypto is that it’s so unstable,” he stated. “Who reaps the rewards when the worth skyrockets and who takes the chance when it nosedives?”
Cryptocurrency charges paid prematurely of providers elevate further hurdles, Fiedler stated.
These conditions, he famous, are typically handled as enterprise transactions between the lawyer and the shopper, as an alternative of the standard cost of charges. They’re topic to a number of further safeguards to forestall conflicts of curiosity, he stated.
Constructing a Enterprise
Roche Cyrulnik Freedman, on the time of its founding a 12 months in the past, stated it will concentrate on high-stakes litigation in rising areas like cryptocurrencies and hashish.
The agency is representing the property of bitcoin developer David Kleiman in a lawsuit against alleged bitcoin creator Craig Wright.
Roche Freedman can be co-lead counsel in a class action case against iFinex Inc., proprietor of the cryptocurrency change Bitfinex and its related stablecoin Tether. Bitfinex paid $18.5 million in February to settle a probe by New York State Legal professional Normal Letitia James.
Cyrulnik claims in courtroom filings that his $7.5 million guide of enterprise accounted for greater than 60% of the agency’s gross income final 12 months and saved it afloat whereas a cryptocurrency cost from its unidentified startup shopper appreciated in worth.
Whereas most tokens don’t often generate such returns, over two weeks earlier this 12 months the dimensions of Roche Cyrulnik Freedman’s stake quintupled to $250 million, in response to courtroom filings by Cyrulnik.
“What these attorneys have finished is flatly opposite to the events’ binding settlement, their moral and fiduciary duties and, governing Florida regulation,” Kasowitz stated.
Kasowitz’s high-powered firm, Kasowitz Benson Torres, is the place Cyrulnik’s brother, Kevin, is a industrial litigation companion and structured finance specialist, stated a supply aware of the matter.
Kasowitz declined to debate how his agency got here to signify Cyrulnik, who didn’t reply to a request for remark.
Earlier this 12 months, Cyrulnik’s now former agency introduced on a brand new companion in Eric Rosen, a former lead federal prosecutor in a wide-ranging college admissions investigation that value a former Big Law practice leader his job. Rosen is listed as co-counsel to Roche Freedman within the New York grievance it filed in opposition to Cyrulnik.
Sean Hecker, a former Debevoise & Plimpton companion who in mid-2018 linked up with litigator Roberta Kaplan to kind New York’s Kaplan, Hecker & Fink, can be representing Roche Freedman within the dispute. Hecker, who didn’t reply to a request for remark, has his personal cryptocurrency trade ties.
In February, Hecker represented Stefan He Quin, the 24-year-old founding father of two cryptocurrency-focused hedge funds, as he pleaded responsible to duping investors out of $100 million. Hecker’s additionally advising one of the founders of cryptocurrency derivatives change BitMEX in a federal cash laundering case.
Bitcoin and different digital currencies and associated belongings have surged in value this year.
Coinbase Inc., the biggest U.S. cryptocurrency change, filed plans to go public last month and disclosed an $18 million windfall for its prime in-house lawyer. Payward Inc., one other cryptocurrency change doing enterprise as Kraken, may journey the bitcoin boom to a $10 billion valuation, according to Bloomberg News.