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 accomplice 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 fee for its companies.
Greater than a yr 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 lately spiked to $250 million.
“I’ve by no means seen a extra egregious scheme,” Cyrulnik’s lawyer, Marc Kasowitz, mentioned in a press release. Kasowitz declined to debate the id of the cryptocurrency asset.
The drama reveals the unintended downstream penalties companies can face after they embrace the rising recognition of digital currencies. The District of Columbia Bar recently joined bars in New York Metropolis and North Carolina that authorized bitcoin and different cryptocurrency funds in return for authorized companies.
“Attorneys are permitted to take every kind of issues for funds, even when the worth of these issues adjustments over time,” mentioned 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 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 against Cyrulnik in New York after he refused to depart 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 accomplice.
Fiedler, the ethics skilled, mentioned paying an legal professional in cryptocurrency is just like paying a lawyer in company stock.
“The issue with crypto is that it’s so unstable,” he mentioned. “Who reaps the rewards when the worth skyrockets and who takes the danger when it nosedives?”
Cryptocurrency charges paid prematurely of companies increase further hurdles, Fiedler mentioned.
These conditions, he famous, are typically handled as enterprise transactions between the lawyer and the consumer, as a substitute of the standard fee of charges. They’re topic to a number of further safeguards to forestall conflicts of curiosity, he mentioned.
Constructing a Enterprise
Roche Cyrulnik Freedman, on the time of its founding a yr in the past, mentioned 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 against alleged bitcoin creator Craig Wright.
Roche Freedman can also be co-lead counsel in a class action case against iFinex Inc., proprietor of the cryptocurrency trade 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 ebook of enterprise accounted for greater than 60% of the agency’s gross income final yr and saved it afloat whereas a cryptocurrency fee from its unidentified startup consumer appreciated in worth.
Whereas most tokens don’t often generate such returns, over two weeks earlier this yr the scale of Roche Cyrulnik Freedman’s stake quintupled to $250 million, in keeping with court docket filings by Cyrulnik.
“What these attorneys have carried out is flatly opposite to the events’ binding settlement, their moral and fiduciary duties and, governing Florida legislation,” Kasowitz mentioned.
Kasowitz’s high-powered firm, Kasowitz Benson Torres, is the place Cyrulnik’s brother, Kevin, is a industrial litigation accomplice and structured finance specialist, mentioned a supply acquainted with the matter.
Kasowitz declined to debate how his agency got here to symbolize Cyrulnik, who didn’t reply to a request for remark.
Earlier this yr, Cyrulnik’s now former agency introduced on a brand new accomplice 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 criticism it filed towards Cyrulnik.
Sean Hecker, a former Debevoise & Plimpton accomplice 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 investors out of $100 million. Hecker’s additionally advising one of the founders of cryptocurrency derivatives trade BitMEX in a federal cash laundering case.
Bitcoin and different digital currencies and associated belongings have surged in value this year.
Coinbase Inc., the most important U.S. cryptocurrency trade, filed plans to go public last month and disclosed an $18 million windfall for its prime in-house lawyer. Payward Inc., one other cryptocurrency trade doing enterprise as Kraken, might journey the bitcoin boom to a $10 billion valuation, according to Bloomberg News.