A recent lawsuit from ConsenSys displays that JPMorgan owns infrastructure critical to Ethereum, showing the protocol to be even more centralized than originally thought.
Ethereum is reliant on the system Infura, which ConsenSys owns. But who owns ConsenSys?
Joe Lubin is the co-founder of ETH and the founder of Consensys.
Lubin holds a lot more power in the Ethereum ecosystem than anyone ever imagined. Don’t forget ConsenSys also owns Metamask.
Don’t Tell the Shareholders…
In August of 2020, the Intellectual property for Infura and MetaMask was transferred to a different entity called CSI. This was done in secret without the permission of the 30-plus shareholders of ConsenSys.
There was one major stakeholder in this new company called CSI:
The fact that a major financial institution now owns the infrastructure vital to maintaining Ethereum was revealed by whistleblowers and shareholders.
Don’t assume these “blockchain” protocols are corruption-proof since the reality is far darker.
Shareholders and Whistleblowers Call Out Corruption
35 ConsenSys AG (CAG) shareholders have requested a special audit of a 2020 transaction in which JPMorgan Chase acquired “influential” ownership in two of its major technologies.
More than half of CAG’s shareholders request a probe into the alleged:
“… fundamental intellectual property and subsidiaries illegally transferred from CAG into a new entity, ConsenSys Software Incorporated (CSI).”
According to a press statement published Wednesday, ConsenSys CEO and Ethereum millionaire Joseph Lubin agreed to provide a 10% share in the new firm as well as a $39 million loan to the new organization.
According to CAG, the sale led JPMorgan to gain a major portion of the company’s profitable intellectual property (IP), especially MetaMask and Infura, as part of the transaction.
Project North Star Displays Ethereum is a Centralized Crony Cantillon Continuance
Project North Star has proved to be very profitable for CSI stockholders such as JPMorgan.
A year following the acquisition, the intellectual property in issue was utilized to raise money for CSI, which was valued at $3 billion at the time.
The ConsenSys spin-off CSI is anticipated to reach $7 billion in revenue with the current round of funding.
In the words of the original CAG insiders, the transaction was “to the prejudice of CAG’s minority stockholders and to the profit of Joseph Lubin personally.”
Caliber Acquisition Group and CSI are both majority-owned by Ethereum co-founder Lubin. Lubin’s wealth is estimated to be worth between $1 billion and $5 billion, according to Forbes.
Deal Could be Invalidated
The former ConsenSys workers are attempting to have the transaction declared invalid by using an item of the Swiss Code of Obligations, which if successful might result in the contract being declared void.
The transaction took place while Lubin and Frithjof Weinert were directors of CAG and CSI at the same time.
In this case, dual representation is not permitted under Swiss and US law, which makes sense given the circumstances.
The shareholders are also pointing out that the compulsory annual shareholder meetings were postponed by two years, which meant they were unaware of the unlawful transaction until after it had already taken place.
It is claimed that Weinert was never properly re-elected to the company’s board of directors, and as a result, did not have the authority to approve Project North Star since these meetings never took place.
A “casual educational event” was held in late 2021 in place of these shareholder meetings, during which CAG employees were told that their numbers will be reduced from 160 to 30 by the end of the year.
As a result, CAG was “de-facto liquidated” without the approval of a shareholder meeting, as well as the transfer of profitable assets (MetaMask and Infura) to CSI.
Plaintiffs claim this breached the directors’ obligation to act in the firm’s best interests by leaving shareholders with stock in a company they didn’t own.
To “assist all those who have been harmed,” the shareholders pledged to “help all those who have been harmed.”
Bitcoin is Built Different
Not What Satoshi Had in Mind and Why Bitcoin Wins
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.” — Satoshi Nakamoto