ConsenSys AG Shareholders File for Independent Audit of MetaMask, Infura Transaction
Shareholders are claiming they were jilted in an asset transfer that involved JPMorgan.
A group of shareholders for Ethereum development company ConsenSys AG have requested that a Swiss court review a deal between two ConsenSys entities that transferred control over popular wallet MetaMask and infrastructure provider Infura, among other key pieces of intellectual property.
According to a press release published Wednesday by former ConsenSys AG employee Arthur Falls, “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” regarding an August 2020 transfer of assets between ConSensys AG and ConSensys Software Inc.
“We’ve filed to have a court assess the transaction, and if the court deems it necessary, they will appoint an independent auditor to provide further scrutiny,” Falls told CoinDesk in an interview.
As first reported by CoinDesk in November, a number of ConsenSys AG shareholders allege that multiple assets were mispriced during the transaction.
According to valuation documents prepared by global accounting firm PwC and viewed by CoinDesk, key assets such as MetaMask were valued as low as $4.4 million for the purposes of the transaction. Banking giant JPMorgan also took a 10% stake in ConsenSys Software as part of the deal.
Additionally, the transaction transferred a $39 million personal debt burden owed to ConsenSys founder Joe Lubin from ConsenSys AG to ConsenSys Software.
ConsenSys has been on a fundraising tear, raising $200 million at a $3 billion valuation in November and $65 million at an undisclosed valuation in April. MetaMask – the gateway for many to Web 3 – and Infura – the developer platform that powers many Web 3 applications – are widely seen as the firm’s crown jewels.
Diana Richter, head of marketing and brand at ConsenSys Mesh (also known as ConsenSys AG), said that Mesh “refutes the allegations underlying the legal action as well as those contained in the factually inaccurate press release.”
“The business fundamentals and operating environment are entirely different today than at the time of the transaction, though the group would like to apply a valuation that might be achieved today to a set of projects that were pre-monetization during the darkest days of COVID when the transaction took place,” Richter said.
A ConsenSys spokesperson also characterized the allegations as an attempt to “litigate matters in the media because there is no viable legal strategy,” and said that the group represents less than 50% of the total individual shareholders and an estimated 12% of the shares outstanding.
Falls estimates that it will take three months for the Swiss courts to assess the transaction and appoint an auditor, and he told CoinDesk that the group is prepared to immediately file further actions pending the auditor’s response.
“We’re pretty confident about the case and what the audit will find,” he said.
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