Over two dozen former employees of Consensys, an Ethereum infrastructure firm, have filed a new lawsuit against the company’s founder and CEO, Joseph Lubin. The lawsuit alleges that Lubin breached a “no-dilution promise” made in 2015, where he promised not to dilute employee equity shares. The plaintiffs claim that Lubin lured them in with promises that Consensys would become the “future of cryptocurrency” and the “crypto Google.” They further allege that Lubin not only broke his promise but also profited from it while they received nothing in return.
The plaintiffs, who held shares in Swiss-based holding company Consensys AG (formerly Consensys Mesh), argue that their shares became “worthless” when Lubin transferred cryptocurrency wallet MetaMask and other assets to a new United States-based entity in 2020. They also named investment bank JPMorgan as one of the defendants, claiming that it played a significant role in negotiating the asset transfer and became a new equity holder in the US entity. The plaintiffs argue that Lubin, his inner circle, and JPMorgan kept the details of the negotiations secret, leaving the plaintiffs in the dark.
In response to the lawsuit, Consensys labeled the claims as “frivolous” and stated that the plaintiffs are attempting to seek a payday by involving US courts after their claims failed to make progress in a Swiss court. The company’s spokesperson emphasized that the plaintiffs were never employees of Consensys Software and called their claims meritless.
Despite Consensys’ claims that the legal challenge went nowhere in Switzerland, the country’s High Court of Zug issued a judgment in favor of the plaintiffs. This ruling supports the plaintiffs’ position that Lubin breached his duties.
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Consensys, founded in October 2014, before the launch of the Ethereum blockchain in mid-2015, is known for developing and hosting infrastructure projects that underpin much of the Ethereum network.
The plaintiffs are seeking damages across six separate causes of action, with the specific amount to be determined at trial.
In conclusion, the lawsuit brought by former Consensys employees against founder Joseph Lubin alleges that he breached his promise not to dilute employee equity shares. The plaintiffs claim that Lubin profited while they received nothing, and their shares became worthless when assets were transferred to a new US entity. Consensys has called the claims frivolous and believes that the plaintiffs are attempting to enrich themselves through litigation. The legal challenge has seen some success in Switzerland, with a judgment in favor of the plaintiffs. The case highlights the importance of fulfilling promises made to employees and the potential consequences of breaching them.
