Ethereum’s venture production studio ConsenSys will face a $ 1 billion audit, according to a report from Arthur Falls. According to Falls, a majority of the company’s shareholders have called for this step to investigate the company’s alleged fraud.
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Investigations conducted under Swiss obligation law will focus on alleged illegal transfer of intellectual property from ConsenSys AG to a new entity called the ConsenSys Software Incorporated (CSI). This assumed transfer occurred in exchange for 10% ownership of the CSI.
In addition, the audit will consider a $ 39 million loan offer from Joseph Lubin, one of the eight Ethereum founders alongside Vitalik Buterin and the founder of ConsenSys. According to Falls, alleged illegal transactions are part of a secret initiative called “Project North Star.”
The purpose of this project is to include the popular crypto web wallet MetaMask and the “influential stocks” of Ethereum infrastructure provider Infura, which supports an important part of this blockchain ecosystem, with JP Morgan and It was to transfer to another legacy financial institution.
This supposed illegal transfer took place on August 14.th, 2020. Falls have been added:
A year later, this intellectual property was used to raise CSI funding at a $ 3 billion valuation, with rumors that it has a $ 7 billion valuation in the current round. Joseph Lubin is a major shareholder of both companies. The deal was damaging to CAG’s minority shareholders and personally benefiting Joseph Lubin.
In addition, the report alleges that Rubin and his partner allegedly violated Swiss law because they served on the board of the aforementioned company during the initiative “Project North Star.” In both European countries and the United States, the company’s dual representatives deserve “special scrutiny,” according to Falls. The report has added something that could have a significant impact on the operation of ConsenSys.
This dual expression is expected to invalidate the transfer of assets from CAG to CSI under Swiss law, and perhaps under US law.
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In addition to the above, the report adds that ConsenSys was allegedly delaying the shareholders’ meeting and investors were unaware of the deal. Lubin’s partner at Project North Star is Frithjof Weinert, who will serve as an unidentified ConsenSys board member.
Therefore, we may add more possible illegal transactions and the reasons why the consequences are declared invalid. As Bitcoinist reported in 2020, ConsenSys announced a 14% reduction in staff. This was one of several announcements that would make the company shrink by almost 90%.
Falls reports reveal that this reduction may have been part of Project North Start, apparently as part of an informal clearing process.
Minority shareholders state that the transfer of assets from CAG to CSI resulted in the de facto liquidation of CAG without the necessary consent of the shareholders’ meeting. Minority shareholders also stated that in actions related to Project North Star, CAG’s directors violated their obligation to act in the interests of CAG.
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At the time of the press, Ethereum is trading at $ 2,966 with a loss of 0.39% on the 4-hour chart.
