ConsenSys CEO Faces Lawsuit Over Alleged Equity Dilution

Joseph Lubin, the founder and CEO of infrastructure firm ConsenSys, is facing a lawsuit filed by 27 former employees in the New York Supreme Court. The ex-employees claim that Lubin breached a no-dilution promise regarding their equity shares, which was established in 2015.

The plaintiffs argue that their shares in ConsenSys AG, a Swiss-based holding company previously known as ConsenSys Mesh, lost value when Lubin transferred substantial assets, including the MetaMask cryptocurrency wallet, to a new U.S.-based entity named ConsenSys Software Inc (CSI) in 2020. They further allege that JPMorgan played a significant role in this asset transfer and became an equity holder in CSI while keeping negotiations confidential.

According to the former employees, Lubin and others profited from their contributions, leaving them with devalued shares due to the asset transfer from ConsenSys AG. They are seeking damages for multiple claims, including breach of contract, breach of fiduciary duty, fraud, and unjust enrichment. Additionally, they are requesting an impartial assessment of assets and asserting their rights to equity in CSI.

In response to the allegations, ConsenSys has labeled the lawsuit as frivolous. Notably, the High Court of Zug has ruled in favor of the plaintiffs. This legal action arises years after the launch of the Ethereum blockchain and comes at a time when ConsenSys has recently secured $726.7 million from investors and is valued at over $7 billion.