Early Ethereum Adviser Sues Law Firm Over $100M Extortion

Early Ethereum advisor Steven Nerayoff is suing Covington & Burling for $100M, alleging the firm mishandled his defense in a 2019 U.S. extortion lawsuit.

Covington & Burling, a law firm, has refuted the claims made by Steven Nerayoff, referring to his case as “meritless” and promising to “vigorously” oppose it.

In a lawsuit filed in the New York County Supreme Court on September 6, Nerayoff claimed that Covington attorney Alan Vinegrad had advised him not to give US prosecutors videos of his “negotiations with the alleged victims” and other correspondence because they demonstrated that his business dealings were “entirely lawful.”

On September 18, 2019, Nerayoff and Michael Hlady, a colleague at his blockchain consultancy business Alchemist, were taken into custody and prosecuted by the authorities, who claimed they had extorted a cryptocurrency startup.

Nerayoff added that in June 2022, he sent the tapes and other evidence to the prosecutor. In May 2023, less than a year later, the accusations were dropped.

Nerayoff argued in the lawsuit that if his Covington lawyers had “presented the exculpatory evidence to the prosecutors in the fall of 2019,” the entire prosecution might have been “staved off.”

The claims were refuted by a Covington representative, who said that the “lawsuit lacks merit, and we will defend against it vigorously.”

According to Nerayoff’s lawsuit, Covington quit representing him on January 10, 2020, after which he spent the next three years and more than $1 million on legal bills.

Romeo Salta, Nerayoff’s current lawyer, is requesting a sum “to be determined at trial but not less than” $100 million, claiming that his client lost additional contracts in the cryptocurrency area and could not “engage in business” due to the indictment.

Nerayoff has sued several other people this year. He filed a $9.6 billion lawsuit against the government in April, claiming that his extortion case investigation and prosecution were handled maliciously.

Additionally, on July 22, he filed a $10 million defamation lawsuit against Tyler Fayard, popularly known as “Boring Sleuth,” alleging that the latter had defamed him online.