Blockchain software technology company ConsenSys is being accused by the majority of its shareholders of operating under malpractice, prompting them to investigate certain irregularities and conduct a multi-million dollar audit.
ConsenSys, the blockchain software technology company founded by Joseph Lubin, is facing a new legal crisis. Press release distribution service Prnewswire published a statement note indicating that 35 former ConsenSys employees, representing more than 50% of the company's shares, have denounced a series of serious irregularities and breaches of duty by the board of directors, requesting the authorities to carry out a special audit based on Swiss laws.
Shareholders accuse ConsenSys of illegally transferring the intellectual property of its popular tools, Dappradar e Infuria, to a new entity backed by JP Morgan, resulting in influential stakes for the US bank's legacy companies over these two products. MetaMask is currently the most widely used browser extension digital wallet on the market. Ethereum, while Infura is the largest infrastructure provider for this blockchain.
In the press release, the shareholders claim that the company's decisions were detrimental to its minority shareholders and to the benefit of Joseph Lubin, its founder and majority shareholder.
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Project North Star: Transfer of MetaMask and Infura
The intellectual property of MetaMask and Infura was transferred from ConsenSys to ConsenSys Software Incorporated (CSI) under the code “Project North Star,” the press release said. At the time of the transfer, both companies, ConsenSys and ConsenSys Software Incorporated, were operated under the management of Joseph Lubin and Frithjof Weinert as CEOs.
The shareholders want to reject the transfer of intellectual property for these two products due to the double representation in both companies. According to them, the double representation is not valid under Swiss law and requires a special audit under US law, so they hope that the transfer will be annulled.
Weinert served as a director and member of the ConsenSys board of directors without being elected to the board in 2019, as the vote was postponed until 2021. Therefore, there is a possibility that his authorization of the Project North Star transaction could be legally voided. As for Lubin, the shareholders point out that the ConsenSys founder received, in exchange for the transfer, 10% of the ownership of the new entity and a loan compensation of $39 million.
ConsenSys Software Incorporated used the intellectual property of MetaMask and Infura to raise funds in 2021, the note said. Evan Van Ness, researcher and founder of Week in Ethereum News, said the current lawsuits follow a series of accusations against Lubin, established by one of ConsenSys' co-founders last month.
BlockCrushr case
In July 2020, ConsenSys faced a lawsuit from BlockCrushr, a Canadian blockchain technology company that accused the company of stealing its intellectual property on a recurring payments project using smart contracts on Ethereum.
In the lawsuit, BlockCrushr claimed that it had participated in the tech event ConsenSys Tachyon Accelerator 2018, where he presented his blockchain project to the company team, sharing the source code and detailed information about it.
ConsenSys, despite showing great interest in the project, failed to fulfill the funding agreement, BlockCrushr said, prompting the company to seek new sources of capital. BlockCrushr successfully funded its recurring payments blockchain platform and planned to launch it on July 23, 2019. However, ConsenSys launched the “Daisy Payments” platform one day before BlockCrushr’s announced date for its new blockchain platform. The Canadian company noted that ConsenSys’ “Daisy Payments” is an identical and competitive product to the one it had created.
A year later, in July 2021, BlockCrushr reached an agreement with ConsenSys, dismissing its lawsuit against the American company.
Continue reading: ConsenSys is accused of stealing code from BlockCrushr and faces a lawsuit
