The rising acceptance of cryptocurrency—and its skyrocketing worth—are fueling a authorized battle amongst founders of a boutique legislation agency in New York and Miami.
Jason Cyrulnik, a former fairness associate at Boies Schiller Flexner, in January 2020 was one among 15 legal professionals to begin the legislation agency, 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 court docket, alleging they’re attempting to grab his $60 million share of a cryptocurrency asset—a bounty whose worth he claims in court docket papers has just lately spiked to $250 million.
“I’ve by no means seen a extra egregious scheme,” Cyrulnik’s lawyer, Marc Kasowitz, stated in an announcement. Kasowitz declined to debate the identification of the cryptocurrency asset.
The drama exhibits the unintended downstream penalties corporations can face once they embrace the rising reputation of digital currencies. The District of Columbia Bar just lately joined bars in New York Metropolis and North Carolina that permitted 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 modifications 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 grievance filed Tuesday in a state court docket 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 income.
Roche Freedman filed a lawsuit Feb. 27 towards Cyrulnik in New York after he refused to go away the agency. A pretrial convention within the case is about for June 9.
Title companions Kyle Roche and Velvel “Devin” Freedman didn’t reply to requests for remark concerning the fallout involving their former associate.
Fiedler, the ethics knowledgeable, stated paying an legal professional in cryptocurrency is much like paying a lawyer in firm inventory.
“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 upfront of providers elevate extra hurdles, Fiedler stated.
These conditions, he famous, are typically handled as enterprise transactions between the lawyer and the consumer, as an alternative of the standard cost of charges. They’re topic to a number of extra 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 could deal with high-stakes litigation in rising areas like cryptocurrencies and hashish.
The agency is representing the property of bitcoin developer David Kleiman in a lawsuit towards alleged bitcoin creator Craig Wright.
Roche Freedman can also be co-lead counsel in a category motion case towards iFinex Inc., proprietor of the cryptocurrency alternate 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 court docket 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 consumer 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 keeping with court docket filings by Cyrulnik.
“What these legal professionals have executed is flatly opposite to the events’ binding settlement, their moral and fiduciary duties and, governing Florida legislation,” Kasowitz stated.
Kasowitz’s high-powered agency, Kasowitz Benson Torres, is the place Cyrulnik’s brother, Kevin, is a industrial litigation associate and structured finance specialist, stated a supply acquainted with 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 associate in Eric Rosen, a former lead federal prosecutor in a wide-ranging faculty admissions investigation that price a former Massive Regulation follow chief his job. Rosen is listed as co-counsel to Roche Freedman within the New York grievance it filed towards Cyrulnik.
Sean Hecker, a former Debevoise & Plimpton associate who in mid-2018 linked up with litigator Roberta Kaplan to type New York’s Kaplan, Hecker & Fink, can also 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 buyers out of $100 million. Hecker’s additionally advising one of many founders of cryptocurrency derivatives alternate BitMEX in a federal cash laundering case.
Bitcoin and different digital currencies and associated belongings have surged in worth this 12 months.
Coinbase Inc., the most important U.S. cryptocurrency alternate, filed plans to go public final month and disclosed an $18 million windfall for its prime in-house lawyer. Payward Inc., one other cryptocurrency alternate doing enterprise as Kraken, may trip the bitcoin growth to a $10 billion valuation, in keeping with Bloomberg Information.