- Former employees of ConsenSys AG, a company founded by an Ethereum co-founder, file a lawsuit for breach of contract.
- Interestingly, the company’s spokesperson has stated that the said individuals are embarking on a fruitless journey.
27 former employees of ConsenSys AG have sued the founder, Joseph Lubin, for depriving them of their equity. ConsenSys AG was launched right before the Ethereum blockchain went live, and Lubin had 100 percent ownership of the company. The plan was to build a decentralized financial and consumer application to create a new, peer-to-peer internet.
According to the court document, Lubin planned a hub-and-spoke organizational model to attract developers, creatives, and executives. This time, the idea was to make the company, its projects, and IP to be owned by all the employees. In this case, early employees were hired with the promise of owning equity in the ConsenSys hub.
Based on this promise, they could not receive salaries that would have been paid by a more established company. The early days of the company were quite bizarre as the equity distribution took years. From 2015 to early 2016, Lubin did not create the equity structure he promised. Finally, in 2016, he created the hub.
The document further explains that Lubin’s wealth grew in an upward trajectory from 2017 to 2019, but the employees’ equity holdings remained illiquid, but on paper. Later, ConsenSys partnered with JP Morgan to execute a series of corporate maneuvers to transfer core assets from the original company to an American company formed in 2020.
More on the Allegations Leveled Against ConsenSys
According to the filing, Lubin ended up breaking his promise to the early employees. Also, their ownership of the company’s assets was diluted.
Lubin promised that these early employees would receive equity in ConsenSys. Then he broke his word. In the process, he violated his legal commitments and duties. While Lubin got rich, Plaintiffs got nothing.
After the asset transfer, the value of the plaintiffs’ shares was severely depleted, leaving them with no reasonable prospect for liquidity. After this came to light through the press, the plaintiffs raised serious questions and even requested a town hall meeting. By 2021 and 2022, the valuation of the company surged to $3.2 billion with $7 billion in Series C and Series D financing. Overall, the Brooklyn-based firm raised $726.7 million from investors.
Despite all of these claims, a spokesperson of the company has branded the plaintiffs as individuals who were never employees of ConsenSys Software and are merely attempting to enrich themselves from the efforts of others.
After two years of getting nowhere with their frivolous claims against ConsenSys Mesh in a Swiss court, plaintiffs now believe their meritless 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. We fully expect that the plaintiffs, who were never employees of ConsenSys Software, will soon find this gambit is another fruitless attempt to enrich themselves from the success of others.
It is important to note that Lubin is also a co-founder of the Ethereum blockchain and its related token, ETH.
