Ethereum Co-Founder Lubin Hit with Lawsuit Over Alleged Consensys Stock Fraud
In Brief
Former employees accused Lubin and $7 billion-valued Consensys of breaking equity promises and devaluing their shares in Consensys AG.
Joseph Lubin, co-founder of Ethereum, is now under legal fire over allegations surrounding the value of Consensys stock. Over two dozen ex-employees are pressing charges, arguing that Lubin and other associated parties engaged in manipulative practices that rendered their shares worthless.
The plaintiffs claim that under Lubin’s guidance, valuable assets from the Swiss holding firm, Consensys AG, were strategically moved out.
This allegedly left many shareholders, who were once promised substantial equity, holding shares that plummeted in value. Some of those taking legal action helped craft a significant asset, the web3 wallet MetaMask, which was among the transferred items.
Consensys Transfers and New Allegiances
Accusations suggest that Lubin, seemingly aligning more with Wall Street, moved these assets to the U.S.-based company, CSI, in 2020. This transition was apparently to welcome outside investors, a move facilitated by Consensys General Counsel, Matt Corva. This strategy allegedly enabled Lubin to sideline the original stakeholders in favor of financial heavyweights.
It’s also worth noting that JPMorgan entered the fray, trading their blockchain enterprise, Quorum, for a stake in CSI. According to the accusations, this transaction handed JPMorgan a cool 10% of CSI. Not just Lubin, but Corva, JPMorgan and Umar Farooq, who spearheads JPMorgan’s blockchain endeavors, are all named defendants.
Promises and Broken Trust
In 2014, Lubin pitched Consensys to employees with a tempting offer: take lower salaries now in exchange for future company equity. Records indicate that Lubin allocated a promising 30% of the firm for employee stocks. The group now leveling this lawsuit had a 9% share of this equity.
The legal team championing the ex-employees’ cause posits a narrative of betrayal. They contend that Lubin reaped financial benefits while those who trusted his vision and opted for stock compensation found themselves shortchanged.
The Other Side of the Consensys Story
Responding to the ongoing legal situation, a Consensys spokesperson said that they initially aimed the allegations at the Swiss-based Consensys Mesh but now target the U.S.-based Consensys Software Inc., hoping for a better result in American courts. They describe the charges as baseless attempts to capitalize on the success of others.
It’s undeniable that CSI has attracted substantial investment interest, boasting a whopping $726.7 million in funds from its backers. Following its Series D financing round, the company’s valuation surged, eclipsing the $7 billion mark.
This legal saga brings to the forefront the complexities of equity promises in the volatile world of tech startups. As the case unfolds, it will undoubtedly shed light on the intricate dance between startups and their stakeholders. Only time will tell if Lubin’s maneuvers were forward-thinking business strategies or deceptive moves that shortchanged early believers.
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About The Author
Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
