In the world of cryptocurrencies, a more pragmatic and business-minded field views the involvement of large banks and government entities as a validation of the technology and a prerequisite for reaching its potential. Crypto purists, on the other hand, are wary of such established players and see their arrival as a threat to the original promise of the blockchain, for example by collecting user data or ensuring compliance with government regulations that purists consider unfair. .

The latest ruling prolongs a dispute that has divided a major group of cryptocurrency pioneers.

Former ConsenSys employees, who are also minority shareholders in the company, allege that it improperly transferred some significant assets to a separate entity now owned by Lubin and a who’s who of big-name investors, including JP Morgan, Microsoft, Softbank and the state of Singapore. -Owned by Temasek.

Those assets include MetaMask, a popular crypto wallet, and Infura, a suite of software tools for blockchain developers, meaning those tools are now in the hands of a company backed by major financial powerhouses.

In March, minority shareholders filed a request for a special audit of the deal. Shortly thereafter, he filed a lawsuit to have the transfer put to a retroactive shareholder vote. Last month, in a previously unreported decision, a judge in the Swiss canton of Zug granted the former employees’ demand for that shareholder vote.

For the plaintiffs, victory is merely tactical. because lubin owns the majority of the shares of ConsenSys AG, the vote is expected to ratify the transfer. But the decision paves the way for more legal wrangling, because the vote would produce a shareholder resolution that can be challenged in court, allowing minority shareholders to insist on the substance of their legal challenge: that Lubin’s stake in the new entity represented a conflict of interest. interest, and that the assets were purchased at too low a price, approximately $50 million.

“Any way you look at it, this is very, very poor management of our assets,” said Arthur Falls, one of the former employees who acts as a spokesman for the group. The group argues that the hundreds of millions of dollars invested in the new entity, ConsenSys Software Inc., since the transfer implies much greater value for the assets.

In an emailed statement, a spokesperson for ConsenSys AG, which now operates as ConsenSys Mesh, denied the allegations, saying the transfer was made in consultation with major law firms and based on an independent valuation by PwC. The statement contends that the price was reasonable at the time the transfer occurred in 2020, during a time of pandemic-induced economic uncertainty, before the latest cryptocurrency bull run and NFT craze boosted the value of assets to new highs.

A person familiar with Lubin’s side of the case, who spoke on condition of anonymity to discuss a sensitive legal matter, said the employees had previously proposed multi-billion dollar valuations for the transferred assets in negotiations that preceded the action. legal. The person argued that the plaintiffs were seeking publicity to force a settlement and said that Lubin’s side was prepared to litigate.

The person described the attitude on Lubin’s part as: “Yes, we would like to reach an agreement. Yes, we would like to have discussions. If they’re not reasonable, we really don’t need to do it.”

The conflict highlights the industry’s difficult transition from its roots in rudimentary, informal projects fostered by idealistic computer coders to becoming a huge global business. Falls said that a privacy policy update issued last month allowing MetaMask to collect users’ IP addresses was emblematic of MetaMask’s departure from cryptocurrency ideals under its new ownership.

Given the obstacles to reversing a complex transaction from years ago, it’s unclear what the outcome of a successful legal challenge might be.

The legal dispute highlights some of the bad blood left over from the early days of one of the world’s largest crypto platforms. Lubin, a Goldman Sachs alumnus and early Bitcoin investor, invested much of his personal fortune in ConsenSys, which was founded in 2014 and was instrumental in transforming Ethereum from an experimental software project to a database-based one. a decentralized finance and internet ecosystem, often called Web3, worth hundreds of billions of dollars.

People familiar with the early days of ConsenSys described a chaotic and informal environment in which business was often done by word of mouth. That left some people who worked with Lubin with the impression that they did not receive all the promised compensation, while Lubin believed that his unique contributions outweighed the complaints of other participants, these people said.

Among the parties that could be affected by the fight are the creditors of the bankrupt exchange house FTX, whose ultimate ability to recover the funds owed will depend on the outcome of several illiquid venture investments made by the imploded financial empire of Sam Bankman- Fried. A 2021 investment round announced by ConsenSys included funds from Bankman-Fried’s defunct hedge fund Alameda Research, which owes FTX billions of dollars.

Falls, which is based in New Zealand, said minority shareholders expect a ruling in the coming days on a related legal request, also made in Switzerland, for a special audit of the transferred assets.

He argued that what was at stake in the fight was more than the loot of a crypto company, but rather the leadership of an industry that originally envisioned itself as an alternative to the established financial system.

“It is ridiculous,” Falls said, “to say that Microsoft, Softbank and JP Morgan are the right custodians for the infrastructure at the heart of the Ethereum ecosystem.”