Former employees claim that Lubin promised equity in a “crypto Google” to entice them to join ConsenSys and accept lower salaries.
Two dozen former employees of Ethereum infrastructure company ConsenSys have filed a lawsuit against the company’s founder and CEO, Joseph Lubin.
They alleged that Lubin violated a “non-dilution commitment” made in 2015, which ultimately diluted their equity stakes and caused the value of their stock holdings to shrink significantly.
ConsenSys faces lawsuit from early employees
According to the lawsuit filed in the New York Supreme Court on Oct. 19, Lubin orchestrated the transfer of key assets, including the widely used crypto wallet MetaMask, to a new U.S. entity in 2020. The move effectively devalued the stock held by early employees.
The lawsuit names investment bank JPMorgan as one of seven defendants, claiming the bank played a key role in negotiating the asset transfer and subsequently became the new equity holder in the U.S. entity.
At the heart of the lawsuit is an alleged document in which Lubin vowed not to dilute employee equity. “It is my intention that the percentages received by Consensys members will not be diluted as a result of additional issuances,” the document reportedly stated. However, the plaintiffs argue that Lubin not only broke that promise, but also personally benefited from the dilution, leaving them with little to show for their contributions to the company.
The former employees, who held shares in Swiss holding company Consensys AG (formerly Consensys Mesh), claim that the shares became “worthless” after the asset transfer. In response to the allegations, a ConsenSys spokesperson refuted the allegations as “meaningless” and claimed that the plaintiffs are attempting legal action in the United States after unsuccessful attempts in Swiss courts.
The spokesperson further stated that they fully expect the plaintiff (who has never been an employee of Consensys Software) to soon discover that this strategy is yet another futile attempt to enrich themselves from the success of others.
ConsenSys founder in court
The former employees joined an earlier version of ConsenSys, which Lubin founded in Brooklyn in 2014. They agreed to take reduced salaries in exchange for promised equity in the company. As stated in the lawsuit, the current version of ConsenSys has received at least $726.7 million in funding from investors and is valued at more than $7 billion.
This lawsuit is not the first involving Lubin and ConsenSys. In January 2023, the High Court ruled in favor of the plaintiffs, ordering the appointment of an auditor to investigate the alleged fraudulent transfers and the valuation of the transferred assets.
The plaintiffs are seeking damages through six different causes of action. The exact amount of damages will be determined at trial. #ConsenSys #诉讼