A complaint against Joseph Lubin, the founder and CEO of ConsenSys AG, a Swiss-based firm that specializes in developing Ethereum infrastructure, has been filed in a New York court by a group of 27 former workers.
They contend that Lubin, who is also one of the Ethereum co-founders, violated his commitment to give them shares in the business. Instead, he did so without their permission, transferring their precious assets to a new US-based entity.
The Covenant and Its Breach
In late 2014, Lubin allegedly persuaded the plaintiffs to join ConsenSys AG (commonly known as Mesh). He wooed them with claims that the business will be the “crypto Google” and the “future of cryptocurrencies.”
Additionally, he guaranteed them in writing that he wouldn’t reduce their stake in the future by issuing more shares. However, the plaintiffs claim that Lubin breached his pledge and reduced their equity through a number of corporate moves made in 2020.
According to allegations, Lubin transferred key assets of ConsenSys AG, including MetaMask, a well-known cryptocurrency wallet, to a newly formed Delaware corporation called ConsenSys Software Inc. (CSI), allegedly with the help of JPMorgan, one of the defendants in the lawsuit.
The plaintiffs contend that Lubin forgot to involve them as stakeholders in CSI and failed to disclose these transactions. Instead, they received shares in ConsenSys AG, which eventually lost value as a result of the loss of its key assets.
The lawsuit stated that “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 as a result of Lubin’s breaches of the agreement and the covenant of good faith and fair dealing.”
The Demand and the Reaction
After two years of futile litigation in a Swiss court, ConsenSys dismissed the claims as “frivolous” and charged the plaintiffs of trying to influence U.S. courts. A ConsenSys spokesperson claimed that the plaintiffs are attempting to capitalize on the accomplishments of others despite never having worked for CSI.
The plaintiffs are currently pursuing damages for a variety of claims, including contract and fiduciary violation, fraud, and unjust enrichment. In addition, they are asserting their ownership rights in CSI and demanding an objective evaluation of ConsenSys AG’s assets and liabilities.
The time of this legal action coincides with a period of significant success for ConsenSys, which has a valuation above $7 billion after receiving $726.7 million from investors. The company creates cutting-edge blockchain-based goods and services, making it one of the top players in the Ethereum ecosystem.