The Big Grievance: Breaking the No-Dilution Promise
In a dramatic twist worthy of a crypto soap opera, over two dozen former employees of the Ethereum infrastructure firm ConsenSys have banded together to sue founder and CEO Joseph Lubin. According to their Oct. 19 filing in the New York Supreme Court, Lubin allegedly diluted employee equity shares, violating a promise he made back in 2015 that they would not face dilution. It’s like telling your kid they can have ice cream before dinner, only to hand them a scoop of broccoli instead!
Once Upon a Time in Crypto: The Alluring Promise
The plaintiffs are not just casual employees—they were lured in with dreams of grandeur and a promise that ConsenSys would become the “future of cryptocurrency” or the “crypto Google.” You’d think they were signing up for a golden ticket to Willy Wonka’s chocolate factory! In late 2014, Lubin reportedly vowed in writing that employee equity would remain intact, stating, “It is my intention that the percentage Consensys members receive will not be diluted by additional issuance.” Alas, as we all know, intentions sometimes go the way of lost Wi-Fi signals—vanishing when we need them most.
Getting Rich While Others Get Stiffed
The plaintiffs are contending that while Lubin got to enjoy the fruits of his labor (and probably a luxurious lifestyle filled with organic avocado toast), they were left out in the cold. How cold, you ask? Cold enough that they claim their shares in ConsenSys AG became “worthless” when Lubin transferred key assets—including the cryptocurrency wallet MetaMask—to a shiny new entity in the U.S. in 2020. Talk about a bait and switch!
In the Mix: JPMorgan Gets Its Hands Dirty
As if this drama couldn’t get twistier, the plaintiffs also named investment bank JPMorgan as a defendant in their lawsuit. They allege that the bank played a critical role in negotiating the asset transfer to the new entity, becoming an equity holder while the original employees were left holding the proverbial bag. The plaintiffs argue that Lubin and his inner circle kept the negotiations under wraps, leaving them in the dark about their stakes. It’s like being the last to know about a surprise party when you’re the guest of honor!
The Ongoing Battle: A World of Frivolous Claims?
In response, a ConsenSys spokesperson did not mince words, labeling the claims as “frivolous” and expressing their belief that the plaintiffs are attempting to cash in on their misfortunes in a more favorable U.S. legal environment after unsuccessful attempts in Switzerland. They added, “We fully expect that the plaintiffs, who were never employees of ConsenSys Software, will soon find this gambit to be another fruitless attempt to enrich themselves from the success of others.” Talk about a dramatic mic drop!
Interestingly, despite ConsenSys’s claims, the Swiss High Court of Zug sided with the plaintiffs, strengthening their case that Lubin breached his duties. The saga continues as these former employees seek damages on six separate grounds, with the total to be decided in court. In a world where so much is uncertain, one thing is clear: conflicts over equity shares can make even the wildest crypto rollercoaster feel tame.
