On Tuesday the 1st of March 2022, a group of thirty-five former employees representing more than 50% of all known ConsenSys AG (CAG) shareholders filed a request for a special audit pursuant to art. 697a et seq. of the Swiss Code of Obligations. The special audit is to investigate serious irregularities at CAG.
On August 14, 2020, fundamental intellectual property and subsidiaries were illegally transferred from CAG into a new entity, ConsenSys Software Incorporated (CSI), in exchange for 10% ownership of CSI and an offset of a $39 million loan by founder Joseph Lubin. Internally code named "Project North Star", the transaction resulted in legacy financial institutions such as JPMorgan Chase acquiring an influential stake in MetaMask and Infura, two of the most widely used infrastructure tools in Ethereum. One year later, this intellectual property was used to raise funding for CSI at a valuation of $3 Billion, with rumors of a $7 Billion valuation for the current round.
Joseph Lubin is the majority shareholder of both companies.The transaction was to the detriment of the minority shareholders of CAG and to the benefit of Joseph Lubin personally.
During Project North Star, Joseph Lubin & Frithjof Weinert acted as directors at both CAG & CSI. For such a transaction, dual representation is in general invalid under Swiss law and considered to warrant special scrutiny in the USA. Due to this dual representation, the transfer of assets from CAG to CSI is expected to be void under Swiss law and likely also under US law.
Because annual shareholder meetings, required by Swiss law, were illegally delayed after the shareholder meeting for 2018 (the meeting for 2019 took place in late 2021, the meeting for 2020 has yet to take place), CAG minority shareholders had no idea this illegal transfer of IP had taken place.
