ConsenSys Founder Joseph Lubin And JPMorgan Accused Of $39M Fraud

March 4, 2022 12:01 pm

ConsenSys AG, the company behind the popular Metamask project, has recently been accused of financial fraud and will be going through a special audit that was requested by 35 ex-employees.

The former employees and existing stakeholders have reason to do this audit due to irregular management by the company’s founder, Joseph Lubin, who is also the majority shareholder of Consensys.

One of the main accusations is that intellectual properties were illegally transferred from Consensys AG to ConsenSys Software Incorporated (CSI).

ConsenSys Software Incorporated (CSI) is responsible for handling all intellectual properties of CAG which would include the most valuable assets the company owns such as Metamask and Infura.

Tokenist reports:

CAG shareholders claim that these intellectual properties (IPs) were illegally transferred from CAG to the newly established CSI on August 14, 2020, resulting in the de-facto liquidation of CAG.

Joseph Lubin allegedly asked for a $39 million offset loan in exchange for 10% of CSI ownership.

Dubbed “Project North Star”, the transaction gives JPMorgan, the world’s largest bank, a stake in both MetaMask and Infura.

Interestingly, the North Star symbolism used to describe this transaction relates to Polaris, the sky’s northern marker that historically gives people hope, lest they are lost in their journey.

In this light, CSI’s intellectual property of MetaMask and Infura were used for CAG’s funding rounds, resulting in a $3.2 billion valuation.

To make the situation even more suspicious, the annual shareholder meetings that the company had planned to do were delayed from 2019 to 2021.

As a result of such a long delay, many company shareholders were not even aware of the intellectual property transfers from CAG to CIS causing suspicion that the delays were done intentionally in order to hide the IP transfers.

As a result, the entire transfers can now be considered illegal as they were done without explicit permission from the necessary shareholders which explains the need to take legal action to reverse the transfers.

The main impact that these fraud allegations will have for the crypto community is the lost of trust that many had for the Ethereum ecosystem to be decentralized.

This is because this potentially legal transfer gives JPMorgan a significant amount of ownership in tools like Metamask which would cause many crypto users to look for alternative solutions.

Tokenist shares:

However, naysayers suggest that Joseph Lubin’s intention from the get-go was to bring the world of crypto into the Wall Street fold. The Financial Times even dubbed him as Wall Street’s crypto whisperer.

In that, Lubin was successful. Last April’s funding rounds for ConsenSys were led not just by JPMorgan, but also by Union Bank of Switzerland (UBS) and Mastercard.

In the same month, Mastercard unveiled Carbon Calculator for customers’ purchases.

With such a potential roadmap on the horizon for MetaMask, we may see a future in which a CBDC is the wallet’s main occupant, determining users’ purchasing habits, while MetaMask becomes decentralized in-name-only.

The erosion of the decentralized image that Ethereum platforms like Metamask have due to this fraud will create a positive outlook for truly decentralized blockchains and platforms such as XRP, BTC, and other top competitors.

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