Blockchain company ConsenSys is facing allegations that its founder illegally transferred assets into a new company.
A group of 35 former employees who claim to represent more than 50pc of all known ConsenSys AG (CAG) shareholders have filed an audit request to a Swiss court.
This is according to former ConsenSys employee Arthur Falls, who said that “fundamental” intellectual property subsidiaries were illegally transferred from CAG into a new entity called ConsenSys Software Incorporated (CSI) in August 2020.
Falls claimed this was done in exchange for a 10pc ownership of CSI and an offset of a $39m loan by CAG founder Joseph Lubin. He said the transaction, internally called ‘Project North Star’, led to financial institutions such as JPMorgan Chase acquiring an “influential stake” in MetaMask and Infura, infrastructure tools widely used in Ethereum.
“Joseph Lubin is the majority shareholder of both companies,” Falls said in a press release on 1 March. “The transaction was to the detriment of the minority shareholders of CAG and to the benefit of Joseph Lubin personally.”
Falls added that the intellectual property was used to raise funding for CSI at a valuation of $3bn one year later. According to him, shareholder requests for information on this transaction were denied for more than a year, until Lubin stated last November that staffing at CAG was being reduced from 160 at the end of 2020 to 30 by the end of 2022.
“This is a reduction of almost 98pc from the company’s peak of over 1,200 in 2017, leaving it only a small single-digit percentage of its former size,” Falls said.
ConsenSys – also known as Mesh – has denied the allegations and said the press release was falsely made by 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,” the company said according to Bloomberg. “Mesh looks forward to formally refuting the allegations and accusations in Swiss courts.”
ConsenSys is a major player on the Web3 scene, which is a version of the internet that is decentralised and based on public blockchains. It develops and provides services focused on the Ethereum blockchain.
After the closing of a $200m financing round, ConsenSys had a valuation of $3.2bn last November. Following this funding round, the company announced plans to create 400 jobs across its global locations, including several positions at its Dublin base.
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