In a recent turn of events, Ethereum’s co-founder, Joseph Lubin, is under legal scrutiny over alleged issues in equity promises related to his blockchain technology company, ConsenSys.
ConsenSys, recently appraised at roughly $7 billion, is at the center of these allegations. The company, which has been instrumental in numerous blockchain innovations, is now caught in a maelstrom of accusations, primarily revolving around equity commitments and asset transfers.
Accusations And Alleged Equity Violations
A group of over twenty former employees has lodged a lawsuit against Lubin, suggesting that the Ethereum co-founder orchestrated a complex asset transfer within the holding structure of ConsenSys.
The group particularly claimed that valuable assets, including the renowned web3 wallet MetaMask, were strategically moved out of the Swiss-based ConsenSys AG, rendering their shares virtually valueless.
According to the report, these allegations paint a picture of deliberate manipulation where Lubin, aided by ConsenSys General Counsel Matt Corva, allegedly shifted these assets to a new US-centric entity named ConsenSys Software Inc (CSI) in 2020. As disclosed in the report, the purported objective behind this move was to attract external investors.
Furthermore, investment banking juggernaut JPMorgan is reported to have played a role, trading its blockchain enterprise, Quorum, for a 10% stake in CSI. Both Corva and JPMorgan’s Global Head of Blockchain, Umar Farooq, are named as co-defendants in the lawsuit.
It is worth noting that historical commitments lie at the heart of this controversy. When Lubin set up ConsenSys back in 2014, a considerable number of employees reportedly opted for diminished salaries, pinning their hopes on the promise of company equity.
These equity commitments allegedly totaled 30% of the company’s holdings. The plaintiffs in this lawsuit are said to own roughly 9% of this committed equity tranche. The lawyers noted:
He broke his word. In the process, he violated his legal commitments and duties. While Lubin got rich, plaintiffs got nothing.
ConsenSys’ Response And The Way Forward
Responding to the lawsuit, a spokesperson from ConsenSys disclosed, emphasizing that the plaintiffs, after not succeeding with their claims in a Swiss court for two years, are now attempting to seek favorable outcomes through the US legal system.
Plaintiffs in an ongoing shareholder case against the Swiss-based web3 incubator and investor Consensys AG, which operates as Consensys Mesh, have just filed suit against U.S. blockchain software developer Consensys Software Inc. in New York state court.
The spokesperson further labeled this move as a mere “gambit” aimed at capitalizing on the success of others.
While this developing story continues to unfold, the Ethereum market has displayed a bullish trend up by 2.5% in the past day as it currently trades at $1,609.
Featured image from Unsplash, Chart from TradingView