Law firm Roche Freedman is facing a second lawsuit from another former partner in an ongoing fight over cryptocurrency tokens that have reportedly soared in value to $250 million.
Paul Fattaruso said in a lawsuit filed Tuesday in Florida that the company paid him nearly $1 million in compensation related to his 2% stake after he left Roche Freedman last year. He pulled out of the company in protest, saying his colleague Jason Cyrulnik was kicked out after the crypto tokens the company received for payment became incredibly valuable.
Cyrulnik and Fattaruso were among 12 Boies Schiller litigators who launched the firm in 2020. Cyrulnik alleges in a separate case that the firm attempted to seize his $60 million share of cryptocurrency assets he was paid in lieu of cash for certain legal fees.
Kyle Roche, founding partner of Roche Freedman, did not immediately respond to a request for comment on the new lawsuit.
Fattaruso worked closely with Cyrulnik, a former associate of Roche Freedman, and left the company shortly after learning she had filed a lawsuit against Cyrulnik, according to the complaint. The company alleged in the previous lawsuit, which is still ongoing, that Cyrulnik was fired for “unprofessional, obstructive and abusive conduct.”
The couple have since reunited to form their own company, Cyrulnik Fattaruso.
Fattaruso alleges that some of the company’s founders entered into a “memorandum of understanding” that divided certain compensation separately from how it would otherwise be shared based on company equity percentages.
According to Fattaruso, the cryptocurrency “tokens” the company received were included in this exclusion, although he was not told of the arrangement when he joined the company. Fattaruso’s complaint states that he has a stake in the cryptocurrency as well as the law firm.
These tokens, which the complaint does not identify, “skyrocketed” in value to over $250 million in early February, Fattaruso said. A “substantial percentage” was agreed to be awarded to Cyrulnik, according to Fattaruso’s claim.
Just as the crypto tokens rose in value, the company voted to remove Cyrulnik from the partnership, according to Fattaruso’s complaint.
Regulators in Washington, New York, North Carolina and elsewhere have said lawyers can accept cryptocurrency as payment, though some states advise clarifying whether a dramatic rise or fall in their value will trigger repayment obligations by companies or their customers.
It is unclear which deal generated the valuable crypto payout. Roche Freedman has numerous crypto-related clients, including the estate of bitcoin developer David Kleiman in a lawsuit against alleged bitcoin creator Craig Wright.
The firm is also co-lead counsel in a class action lawsuit against iFinex Inc., owner of cryptocurrency exchange Bitfinex and its associated stablecoin Tether. Bitfinex paid $18.5 million in February to settle an investigation by New York State Attorney General Letitia James.
Cyrulnik claims in court documents that his $7.5 million in business volume accounted for more than 60% of the company’s gross revenue last year and kept it afloat while the payout cryptocurrency from its unidentified startup client has gone up in value.
Fattaruso is represented by Jeffrey Schneider, Miami-based founding partner at Levine Kellogg Lehman Schneider + Grossman.
Cyrulnik is represented in his lawsuit by Mark Kasowitz, whose high-powered firm, Kasowitz Benson Torres, is where Cyrunlik’s brother is a business litigation partner, Bloomberg Law reported.
Brian Baxter contributed to this report.