More than two dozen early employees of the blockchain software company Consensys have filed a lawsuit against Ethereum co-founder Joseph Lubin, Consensys, and other parties. The plaintiffs allege Lubin broke contractual promises related to equity compensation made when the employees joined the company in its formative years starting in 2014.
Ethereum Co-Founder Joseph Lubin Faces U.S. Lawsuit
The lawsuit filed in New York comes as Consensys, now valued at over $7 billion, has evolved from its early experimental structure to a more traditional centralized company. The lawsuit was filed on October 19, 2023, in New York state court by 27 former Consensys employees.
The court filing names Joseph Lubin, Consensys, and JPMorgan Chase as defendants. The plaintiffs claim Lubin induced them to join Consensys in its early days with offers of equity in the parent “hub” company Consensys AG.
The former staff members allege Lubin promised this equity would not be diluted. However, in 2020 Consensys restructured, reportedly moving key assets to a new Delaware entity Consensys Software Inc. (CSI). The plaintiffs claim they were largely excluded from the restructuring, leaving their shares in the original Consensys AG far less valuable.
“Lubin made a similar offer to each plaintiff in connection with his or her joining Consensys; plaintiffs accepted the deal, and an agreement was formed,” the lawsuit details.
Lubin allegedly broke a deal that early employees would “win or lose – together – alongside Lubin and Consensys.” The suit claims “Finance took precedence over founding employees.” It seeks damages for breach of contract and fiduciary duties.
It’s not the first instance where Consensys and Lubin have faced such allegations. On March 1, 2022, a collective of thirty-five ex-staffers, accounting for over half of all recognized Consensys AG (CAG) stakeholders, lodged a petition for a distinctive review in line with article 697a and following sections of the Swiss Code of Obligations. The intent? To delve deep into significant discrepancies within CAG.
A spokesperson for Lubin and Consensys fervently refuted the allegations, describing them as “frivolous” in an email sent to Bloomberg. “After two years of getting nowhere with their frivolous claims against Consensys Mesh in a Swiss court, plaintiffs now believe their merit-less claims stand a better chance of yielding a pay day if they game U.S. courts and entangle Consensys Software and other unrelated parties in litigation,” the spokesperson stressed.
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