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Ethereum Co-Founder Hit With Lawsuit Over ConsenSys Shares

Billion-Dollar Battle: Ethereum Co-Founder Hit With Lawsuit Over ConsenSys Shares

Samuel Edyme
by Samuel Edyme
1 year ago
·
Posted in Crypto News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

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.

Related Reading: Why Crypto Software Company ConsenSys Is Sacking Nearly 100 Staff

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. 

Related Reading: Ethereum’s ConsenSys Closes $450M Round And Announces Major Changes To MetaMask

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.

Ethereum (ETH) price chart on TradingView
Ethereum (ETH) price is moving sideways on the 4-hour chart. Source: ETH/USDT on TradingView.com

Featured image from Unsplash, Chart from TradingView

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Samuel Edyme

Samuel Edyme

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Edyme is a writer, a content writer that specialises in writing about the crypto realm. Asides Bitcoinist and NewsBTC, Edyme's writing has been featured in top sites such as Blockchain.News, CoinMonk, Blockchain Reporter, Bitcoin Insider among others.

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