A group of 27 former employees from ConsenSys AG, a Swiss-based company specializing in Ethereum infrastructure development, has filed a lawsuit against their founder and CEO, Joseph Lubin, in a New York court.
According to their claims, Lubin, who is also one of the co-founders of Ethereum, broke his commitment to grant them equity within the company. Instead, he transferred its valuable assets to a new US-based entity without obtaining their consent.
The Promise and the Breach
According to the lawsuit, Lubin convinced the plaintiffs to join ConsenSys AG (also known as Mesh) in late 2014. He enticed them with promises that the company would be the “future of cryptocurrency” and the “crypto Google.”
Additionally, he assured them in a document that he would not decrease their equity by issuing more shares in the future. However, according to the plaintiffs, Lubin broke his promise and diluted their equity through various corporate maneuvers executed in 2020.
Allegedly, with assistance from JPMorgan, one of the defendants in the case, Lubin transferred significant assets of ConsenSys AG (including MetaMask, a popular crypto wallet) to a newly-incorporated Delaware company called ConsenSys Software Inc. (CSI).
The plaintiffs contend that Lubin failed to disclose these transactions and neglected to include them as stakeholders in CSI. Instead, they were left with shares in ConsenSys AG, which ultimately depreciated due to the loss of its primary assets.
“As a result of Lubin’s breaches of the agreement and the covenant of good faith and fair dealing, Plaintiffs have been robbed of their expectation to share in ConsenSys’s success in return for their increased risk, lower salaries, and foundational efforts as early employees,” the filing claimed.
The Response and the Demand
ConsenSys has dismissed the allegations as “frivolous” and accused the plaintiffs of attempting to manipulate U.S. courts after their unsuccessful proceedings in a Swiss court over two years. According to a ConsenSys spokesperson, the plaintiffs were never employees of CSI and are seeking to profit from others’ achievements.
The plaintiffs are currently seeking damages for breach of contract, breach of fiduciary duty, fraud, unjust enrichment, and other claims. Additionally, they are demanding an impartial assessment of ConsenSys AG’s assets and liabilities while asserting their rights to equity in CSI.
This legal action arises during a period when ConsenSys experiences substantial success with a valuation exceeding $7 billion after securing $726.7 million from investors. The company is one of the leading players in the Ethereum ecosystem, developing innovative blockchain-based products and services.
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