Steven Nerayoff, an early advisor to the Ethereum network, has initiated a lawsuit against the prestigious law firm Covington & Burling, demanding $100 million in damages. This legal action stems from what Nerayoff asserts was a mishandling of his defense in a 2019 extortion case brought by the United States government.
In a lawsuit filed on September 6 in the New York County Supreme Court, Nerayoff claims that his former legal representation, led by Covington lawyer Alan Vinegrad, advised him against handing over crucial evidence to U.S. prosecutors. This evidence included videos of negotiations with the alleged victims and various communications, which Nerayoff contends would have demonstrated that his actions were entirely lawful.
The charges against Nerayoff and Michael Hlady, an associate from his blockchain consulting firm Alchemist, date back to September 18, 2019. They were accused of extorting a cryptocurrency startup. Nerayoff argues that the charges, which were later dismissed in May 2023 after he submitted the aforementioned videos and other evidence to the prosecutors in June 2022, could have been avoided much earlier if his attorneys had presented this exculpatory evidence in the fall of 2019.
Allegations Against Covington & Burling
Nerayoff’s lawsuit articulates several key accusations:
- Improper Legal Advice: He alleges that the guidance provided by Covington & Burling prevented him from presenting critical evidence that could have exonerated him at an earlier stage.
- Financial and Professional Damage: Following his indictment on January 10, 2020, Covington & Burling withdrew their representation. Nerayoff claims this led to over $1 million in legal fees and significant losses in business opportunities and contracts within the crypto industry.
- Seeking Compensation: His current attorney, Romeo Salta, is pursuing damages not less than $100 million, citing severe impacts on Nerayoff’s professional engagements and reputation in the cryptocurrency sector.
A spokesperson from Covington has vehemently denied these allegations, stating that the lawsuit is without merit and that the firm will defend against it vigorously.
Nerayoff’s legal battles extend beyond the lawsuit against Covington & Burling:
- Government Lawsuit: In April, he filed a $9.6 billion lawsuit against the government, claiming malicious investigation and prosecution during the extortion case.
- Defamation Lawsuit: On July 22, Nerayoff initiated a $10 million lawsuit against social media figure Tyler Fayard, alias “Boring Sleuth,” accusing him of defamation.
| Lawsuit | Amount Claimed | Details |
|---|---|---|
| Against Covington & Burling | $100 million | Mishandling of 2019 extortion case defense |
| Against the U.S. Government | $9.6 billion | Malicious prosecution and investigation |
| Defamation against Tyler Fayard | $10 million | Defamation claims related to social media |
Steven Nerayoff’s series of legal actions highlight a complex intersection of law and cryptocurrency, emphasizing the potential repercussions of legal advice and representation in high-stakes financial sectors. As the legal proceedings unfold, they will likely shed further light on the dynamics within the cryptocurrency legal landscape and the responsibilities of legal practitioners in such cases.
