” But despite that roadshow, COVID jammed a spoke in the company’s fundraising wheel. With crypto plunging into winter, and putting the broader economy in deep freeze, options were quickly leaving the table.
To value the assets, PwC produced what the consulting firm called a “Valuation Report.” The number it arrived at was $46.6 million – total. That sum may sound strangely low, especially considering that these products, identified repeatedly in Swiss court documents as the company’s “crown jewels,” are considered fundamental to the Ethereum ecosystem. But, for the former employees pursuing legal action, this low valuation was key to the design of Project NorthStar.
Whatever the valuation should have been for the assets, the question remains whether the deal was appropriate to begin with. With its specifics abstracted, the picture we have is of the CEO and controlling shareholder of a company creating a second company, of which he would similarly be CEO and controlling shareholder, and transferring assets from company A to company B.
According to former employees, what ConsenSys calls a “loan” was, in reality, Lubin’s personal investment in the company he’d made over the years. “Lubin considered all of the money that he put into Consensus AG – and this was unbeknownst to anyone actually involved – he was writing everything down as debt,” said Arthur Falls, an early ConsenSys employee and representative of the former employees pursuing legal action against the company.
Lubin did not reply separately to a request for an interview. Consensys AG, now called Mesh, provided a statement responding to allegations made by the former employees.According to the company, “With regards to the ConsenSys Software Inc. transaction, the spin out was conducted properly, with the close involvement of globally renowned law firms and an independent valuation by PwC.
As it happened, JP Morgan would invest no money in ConsenSys despite the fraught corporate maneuvering. Its main contribution was the transfer of Quorum, an enterprise targeted version of Ethereum similar to PegaSys, a product ConsenSys had already built. Nevertheless, JP Morgan received 10% of the new company. Lubin would wind up with a 52.5% stake in the new company, in addition to his 70% stake in the original Swiss company.