Token Startup Founder Took Steps to Sue Lubin, ConsenSys for $13 Million
Ethereum co-founder Joseph Lubin could soon be sued by a former employee, according to court documents filed in New York.
Harrison Hines, former head of
Token Foundry at Lubin’s Brooklyn-based venture studio ConsenSys, began the process of filing a legal complaint in June against his former employer. The complaint seeks more than $13 million for alleged fraud, breach of contract, unjust enrichment and unpaid profits.
According to the summons from Hines’ lawyer:
“The relief sought is monetary damages in the amount of $12,827,000 on the contract, quasi-contract and fraud claims plus $404,783 in unpaid profits.”
Lubin’s legal representation responded to the summons by clarifying which counsel might represent the defendants in this case. The details of the case, along with the upcoming dates, are still unclear. The plaintiff, Hines, has yet to follow up with a formal lawsuit and the deadline for such paperwork has since passed. This may mean that legal representatives for both parties are pursuing a prospective agreement outside of court.
Hines could not immediately be reached for comment; requests sent to ConsenSys were not returned as of press time.
Launched in April 2018, Token Foundry was the division, or “spoke” of the ConsenSys “hub,” responsible for promoting token sales and pitching token-design services to clients. The fees for consulting services often included a portion of the newly minted tokens in addition to a percentage of proceeds from the sales which Token Foundry helped launch, according to a person familiar with the matter who requested anonymity.
As CoinDesk previously reported, the spoke projected more than $50 million in revenue for 2018 and is widely believed to have fallen short of that goal. Top clients included the $13.4 million sale for Dether, which allowed physical shops to sell cryptocurrencies, Virtue Poker’s $18.5 million token sale and the token sale for geolocation startup FOAM, which raised $16.5 million in August, just weeks before Hines was let go.
The source described Hines as a former member of Lubin’s “inner circle.”
As recently reported by CoinDesk, conversations around equity have been a point of contention for many ConsenSys staffers. Among those are Token Foundry employees who were laid off in late 2018, sources said.
In early 2019, ConsenSys restructured its token-centric division as ConsenSys Digital Securities, calling the business in a press release “a premier advisory firm for Security Token Offerings (STOs) and digital asset structuring.”