Former ConsenSys employees sue Joseph Lubin

More than 20 former ConsenSysfiled suit against founder Joseph Lubin alleging breaches of the infrastructure company’s stock agreements.

According to the complaint, in 2014 Lubin “lured smart and motivated” engineers to join ConsenSys, claiming the firm would be the “future of cryptocurrency” and a “crypto Google.” They agreed to lower pay in exchange for an equity stake in the firm.

Lubin allocated 30% of the holding company’s shares for employees. The plaintiffs own about 9% of that subsidiary.

In 2015 the defendant allegedly promised to “not dilute” the employees’ stake, but breached the agreements. As a result, the co-founder not only breached promises and legal duties, but “got wealthy,” leaving the employees with nothing, they claim.

Shareholders of Swiss ConsenSys AG (formerly ConsenSys Mesh) said the securities had become “useless” when in 2020 Lubin transferred the rights to MetaMask and other assets to a new US-based subsidiary.

JPMorgan is also named as a defendant due to its “key role” in carrying out the deal, as a result of which Lubin became a new shareholder in the organization.

“Lubin, his closest circle and the bank kept negotiation details secret — the plaintiffs were left in the dark. He did not bring many of the early team members [the plaintiffs] into co-ownership of the new company. Instead, they continued to own shares in a far less valuable entity that lost its assets,” the document says.

The former employees seek damages on six separate grounds, to be determined at trial.

In a Bloomberg interview, a ConsenSys spokesperson called the claims “baseless.” He noted that the plaintiffs are now trying their luck in the US legal arena after getting nowhere for two years with their claims in the Swiss court.

“They believe their suit has a better chance of obtaining payouts if they prevail in US courts and drag the company and other unrelated parties into the litigation. We expect that the plaintiffs, who have never been employees of ConsenSys Software, will soon discover that this gambit is yet another futile attempt to profit from the success of others,” he explained.

Nevertheless, the Swiss Federal Supreme Court ruled in favour of the plaintiffs, the publication noted.

In March 2022, ConsenSys announced a Series D funding round. At that time, the crypto wallet developer raised $450 million at a $7 billion valuation.

In July 2023, the company stated that it had sufficient funds to continue operating amid rumours of talks about a potential capital infusion.