Former employees of ConsenSys file for audit, alleging “severe irregularities”

“Joseph Lubin owns a majority stake in ConsenSys. The deal was to the injury of CAG’s minority shareholders and to Joseph Lubin’s personal gain,” the organization claimed.
Former employees of ConsenSys file for audit, alleging "severe irregularities" | Coinscreed

A group claiming to represent 35 former ConsenSys AG (CAG) employees has requested an audit under the Swiss Code of Obligations to look into “severe irregularities” the business allegedly committed in the middle of 2020, according to the organization.

CAG, sometimes known as Mesh, is the company behind MetaMask, the most popular Ethereum-based wallet. It was created by Joseph Lubin, who is also the co-founder of Ethereum.

According to a news release, on March 1, a group of employees who claim to represent almost half of all known stockholders filed a motion with a Swiss court.

On Aug. 14, 2020, the organization said, “fundamental intellectual property and subsidiaries were fraudulently transferred” from CosenSys AG (also known as CAG) to a new business called “ConsenSys Software Incorporated” (CSI).

The former employees further say that they and other minority shareholders were unaware of the IP transfer and that the transaction was only carried out to benefit significant shareholders and Lubin.

“Joseph Lubin is the majority shareholder of both companies. The transaction was to the detriment of the minority shareholders of CAG and to the benefit of Joseph Lubin personally.”

In a statement, the Washington-based corporation retaliated, claiming that the release was the product of a single employee.

“Mesh refutes the allegations underlying the legal action as well as those contained in the factually inaccurate press release that was self-authored by one of the former employees. Mesh looks forward to formally refuting the allegations and accusations in Swiss courts.”

The IP and subsidiaries were transferred to “ConsenSys Software Incorporated (CSI) in exchange for 10% ownership of CSI and a $39 million loan from founder Joseph Lubin,” according to the accusations.

Top traditional financial institutions such as JP Morgan Chase were said to have acquired stakes in MetaMask and Ethereum developer platform Ifura as a result of the deal, while the intellectual property was reportedly used as a key drawcard to raise funding for CSI at a $3 billion valuation in 2021.

The property transfer was valued correctly at the time, according to ConsenSys, and the landscape had evolved substantially since mid-2020, which is why the assets surged in value so dramatically.

The employees want the “IP and subsidiaries back to CAG” and are willing to go to court to find a solution.

“We will push to seek justice through the Swiss court system. We are not interested in settling for less and we are ready for the upcoming court battles.”

The latest legal action against ConsenSys and Lubin comes just months after former general partner (GP) Kavita Gupta filed a complaint in New York alleging that the firm had failed to pay out the agreed-upon carry % for a fund she managed between 2017 and 2019.

Consensys retaliated by filing a complaint in mid-January saying that Gupta “fraudulently convinced ConsenSys to hire her” by using phony academic degrees and work credentials.

Gupta Gupta subsequently launched a second lawsuit, saying that ConsenSys had committed “fraud, negligent misrepresentation, and unjust enrichment” in connection with the allegations made against her.

Will Foxley, the content director of Compass Mining and a cryptocurrency writer, compared the back-and-forth on Twitter on Feb. 3 to a “National Enquirer piece.”