Steven Nerayoff, an influential early adviser to the Ethereum network, has filed a lawsuit against the law firm Covington & Burling, seeking damages of $100 million. The lawsuit alleges that the firm mishandled his defense during a 2019 extortion case, which impacted his professional and personal life.
The Extortion Case
In September 2019 Nerayoff was arrested alongside Michael Hlady who was an associate at his blockchain consulting firm Alchemist. The pair was arrested on charges of extorting a cryptocurrency startup. According to the U.S. prosecutors, the duo allegedly threatened to destroy the startup if their demands for more cryptocurrency and company shares were not met.
The legal complaint, filed on September 6 in the New York County Supreme Court, claims that Covington’s defense was critically flawed. Nerayoff asserts that his attorney, Alan Vinegrad of Covington, advised against turning over crucial evidence to the prosecutors, including videos and emails that purportedly demonstrated the legality of his actions. Nerayoff contends that this evidence was finally submitted in June 2022 and led to the dismissal of the charges in May 2023.
SEC’s Case Dismissals Raise Accountability QuestionsClaims and Defenses
Nerayoff alleges that if this exculpatory evidence had been presented earlier, the charges in fall 2019 could have been avoided. He also argues that the failure to properly handle the defense not only prolonged the legal battle but also caused him major financial damage. The damages include over $1 million in subsequent legal fees and lost business opportunities within the cryptocurrency sector. Covington & Burling has responded firmly, stating that the lawsuit is without merit and vowing to defend against it vigorously.
Ongoing Legal Battles
The lawsuit is one of several legal actions initiated by Nerayoff this year. Some of the other disputes include an ongoing $9.6 billion lawsuit against the government and a $10 million defamation claim against a social media personality. These reflect his contentious interactions within the legal and crypto communities.
