Ethereum (ETH) co-founder and Consensys CEO Joseph Lubin is facing a lawsuit from 27 early employees who claim Lubin breached contractual agreements regarding stock.
According to the lawsuit, filed in New York Supreme Court, Lubin promised employees “hub equity” in ConsenSys (as it was then called), that is, shares in the central ConsenSys entity that would own the various products and subsidiaries.
This equity was offered as compensation for joining the company in its early stages at below-market wages. Lubin said the employees will be “joint stakeholders” and participate in the potential upward trajectory of ConsenSys’ growth.
However, in August 2020, ConsenSys underwent a restructuring in which core assets, including MetaMask, Infura, and Codefi, were transferred to a new Delaware entity, ConsenSys Software Inc. (CSI), leaving the original Swiss entity ConsenSys AG to hold less valuable assets.
Lubin emerged with a 52.5% stake in CSI, while most of the early employees were not offered shares. The employees allege that this was a breach of contract regarding the “equity” promise.
The filing alleges the asset transfer was executed without notice, a shareholder vote or giving employees an opportunity to participate. He claims the valuation was falsified to benefit Lubin’s personal interests.
In addition, it alleges that Lubin misled employees about their position, rights and company plans. The employees are seeking compensation for the loss of growth upside at ConsenSys, which they say robbed them of the returns they were promised for their early risk-taking and contributions.
The complaint, filed in New York Supreme Court, demands a jury trial and seeks “damages in an amount to be determined at trial, including, but not limited to, Plaintiff’s anticipated damages, defamation, and damages Plaintiff has suffered as a result of Lubin [et. al.’s] Actions? and… affording the plaintiffs such other and further relief as the Court may deem just and proper.”
Lubin has yet to file a response to the lawsuit.
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