HomeEthereum software development firm ConsenSys faces audit for financial irregularities

Ethereum software development firm ConsenSys faces audit for financial irregularities

Charles Thuo

ConsenSys, an Ethereum software development company, is facing a multi-billion audit to investigate financial transaction irregularities that have occurred at the company.

On March 1, 2022, a group of 35 employees filed a request for a special investigation in accordance with the Swiss Code of Obligations. However, this group only represents more than 50% of the ConsenSys AG shareholders who want this issue investigated.

The financial irregularities in question

According to reports, the irregularities in consideration were committed on August 14, 2020, and involved the transfer of fundamental intellectual property and subsidiaries to a new entity called Software Incorporated (CSI). The transactions in question were made to offset the loan ConsenSys founder, Joseph Lubin, amounting to $39 million and in exchange for a 10% stake of CSI.

The transferred assets include ConsenSys products of MetaMask, Infura, Truffle,  Codefi, and Pegasys. They also included subsidiaries in the UK, France, Ireland, Hong Kong, and Australia. The total value of the transferred assets was valued at $46.6 million.

During the transaction, Frithjof Weinert and Joseph Lubin acted as the directors of both CSI and ConsenSys AG and the transactions happened without the knowledge of minority shareholders, which is illegal according to the Swiss Law and calls for a special investigation and audit in the United States.

Additionally, the annual shareholder meetings for ConsenSys were illegally delayed after 2018 making Frithjof Weinert continue serving as a member of the board of directors besides the fact that he is also accused of being an illegally appointed director.

The Swiss Court shall review the requested audit before concluding on whether investigations need to be carried out.

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