In a recent turn of events, Ethereum co-founder Joseph Lubin is under legal scrutiny over alleged issues in equity pledges related to his blockchain technology company, ConsenSys.
ConsenSys, recently valued at approximately $7 billion, is at the center of these allegations. The company, which has been instrumental in many blockchain innovations, is now caught in a maelstrom of allegations, mainly revolving around equity commitments and asset transfers.
Accusations And Alleged Equality Violations
A group of more than twenty former employees filed a lawsuit against Lubin, suggesting that the Ethereum co-founder orchestrated a complex transfer of assets within the ConsenSys holding structure.
The group notably claimed that valuable assets, including the famous web3 wallet MetaMask, were strategically moved out of the Swiss-based ConsenSys AG, making its shares almost worthless.
According to the report, these allegations paint a picture of deliberate manipulation where Lubin, aided by ConsenSys General Counsel Matt Corva, allegedly transferred these assets to a new US-centric entity called ConsenSys Software Inc (CSI) in 2020. As revealed in the report, the purported purpose behind this move was to attract outside investors.
Further, investment banking juggernaut JPMorgan is reported to have played a role, trading its blockchain venture, 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 significant number of employees reportedly opted for reduced wages, pinning their hopes on the promise of corporate equity.
These stock holdings allegedly totaled 30% of the company’s holdings. The plaintiffs in this lawsuit are said to own about 9% of this involved stock cut. The lawyers noted:
He broke his word. In the process, he violated his legal obligations and commitment. While Lubin got rich, plaintiffs got nothing.
ConsenSys’ Answer And The Way Forward
Responding to the lawsuit, a spokesperson for ConsenSys shared, emphasizing that the plaintiffs, after not succeeding with their claims in a Swiss court for two years, are now trying to seek favorable results through the American legal system.
Plaintiffs in an ongoing shareholder case against Swiss-based web3 incubator and investor Consensys AG, which operates as Consensys Mesh, recently filed a lawsuit against US blockchain software developer Consensys Software Inc. in the state court of New York.
The spokesperson further labeled this move as a mere “gambit” aimed at capitalizing on the success of others.
As this development story continues to unfold, the Ethereum market has shown a bullish trend of 2.5% in the past day, as it is currently trading at $1,609.