J.P. Morgan Owns Crucial Part of Ethereum
J.P. Morgan Owns Crucial Part of Ethereum
ConsenSys lawsuit reveals JPMorgan owns critical Ethereum infrastructure
So this is upsetting for the pro decentralization fan boys. It turns out the most innovative bank has a huge stake in the ownership of Ethereum.
Centralization in cryptoland? What a surprise!
A group of 35 shareholders of Ethereum giant ConsenSys AG (CAG) have filed for a special audit of a 2020 deal that saw JPMorgan Chase acquire an “influential” stake in two of its flagship products.
ConsenSys Cheated Ethereum
The former employees — who represent more than half of all CAG shareholders — want an investigation into the matter which allegedly saw:
“… fundamental intellectual property and subsidiaries illegally transferred from CAG into a new entity, ConsenSys Software Incorporated (CSI).”
This was in exchange for a 10% stake in the new entity and a $39 million loan by ConsenSys chief and Ethereum billionaire Joseph Lubin, according to a press release issued Wednesday.
Mr. Lubin was always kind of suspect. On August 14, 2020, fundamental intellectual property and subsidiaries were illegally transferred from CAG into a new entity, ConsenSys Software Incorporated (CSI), in exchange for 10% ownership of CSI and an offset of a $39 million loan by founder Joseph Lubin.
What is Project North Star?
The deal, known within CAG as Project North Star, resulted in financial institutions (JPMorgan) winning a significant slice in the company’s lucrative intellectual property (IP), specifically MetaMask and Infura.
That a bank might own a significant part of MetaMask is downright scary for crypto’s supposed unique value proposition.
ConsenSys, a software development firm that builds cryptocurrency-related infrastructure, raised $65 million in funding from big banks such as UBS and JPMorgan Chase, the company said in April, 2021.
Trouble in Paradise for Ethereum’s Reputation in 2022
Cardano founder Charles Hoskinson has reacted to the news of blockchain company ConsenSys facing a multi-billion dollar audit as shareholders claimed ''irregularities.'' The IOHK CEO indirectly hinted at decentralization in the Cardano ecosystem as he tweeted: "Just want to point out that J.P. Morgan does not own any critical Cardano Infrastructure."
The sage of the crypto ponzi scheme continues.
Metamask is described as Ethereum’s Most Critical Infrastructure
Both crypto wallet MetaMask and node network Infura persist as arguably the Ethereum ecosystem’s most critical infrastructure.
MetaMask is a software cryptocurrency wallet used to interact with the Ethereum blockchain. It allows users to access their Ethereum wallet through a browser extension or mobile app, which can then be used to interact with decentralized applications.
So if J.P. Morgan wanted to create a crypto super-app, they actually could in the 2020s.
Blockchain intelligence company TRM Labs has added JPMorgan Chase & Co. to its list of investors after the bank announced its strategic investment in late February, 2022. They understand how much the future of finance is blockchain and have made adequate preparations.
Lubin is definately centralizing the Ethereum ecosystem. Think about it, Joseph Lubin, a cofounder of Ethereum, the second-most valuable cryptocurrency network next to Bitcoin, started ConsenSys in 2014. For much of its existence, the venture has been self-funded by Lubin, who is widely believed to be a multibillionaire based on his holdings of Ether, or ETH, the cryptocurrency that fuels Ethereum.
Do we really think Lubin cares about the ideology and distributed ethos behind crypto and Ethereum? Does Jack Dorsey? Does Elon Musk, to be honest?
ConsenSys’s work is directly related to two of the hottest fields to explode from the crypto underworld into public consciousness over the past year. Ethereum is the home for most of the biggest non-fungible token, or NFT, projects, which involve blockchain-based digital art or collectibles.
Wall Street has Hacked Crypto
Turns out, Wall Street fat cats JPMorgan directly profits from — and even controls — that infrastructure.
Not exactly what Satoshi Nakamoto envisioned when he embedded “Chancellor on brink of second bailout for banks” in Bitcoin’s genesis block.
Indeed, Project North Star has proven incredibly lucrative for CSI shareholders like JPMorgan. A year after the transaction, the IP in question was used to raise funds for CSI at a valuation of $3 billion.
After a current round, the ConsenSys spin-off CSI is expected to hit $7 billion. Lubin is making back-room deals as we speak.
These people know how to juice NFT and DeFi narratives. Make no mistake a lot of crypto hype is manufactured. We’ve seen this on Twitter, a playground for Billionaires and in how crypto and even Bitcoin’s price is manipulated.
Lubin Abused His Power in Ethereum’s Ownership Structure
Original CAG insiders reckon the deal was “to the detriment of the minority shareholders of CAG and to the benefit of Joseph Lubin personally.”
Ethereum co-founder Lubin is the majority shareholder of CAG and CSI. Forbes values Lubin’s fortune between $1 billion and $5 billion. Let’s make no mistake, money does corrupt. The fact that it’s occurring in crypto’s most important ecosystem is no surprise. The “decentralization” narrative was always pretty weak when you look at how easy the DAO was to hack and its apparent lack of security.
That Dimon and Lubin has some deals is proof of the corruption. The former ConsenSys employees are invoking an article of the Swiss Code of Obligations which, if successful, may render the deal void. Good luck with that HODLers.
The crypto tribes don’t even know what hit them. At the time of the transaction, both Lubin and board member Frithjof Weinert were directors of both CAG and CSI. Unfortunately, under Swiss and US law, dual representation in a situation like this is not allowed.
How are those DAOs doing to make big decisions guys? The shareholders are also flagging the fact that required annual shareholder meetings to be delayed by two years, meaning they had no idea the illegal deal even happened.
(An associated Tweet to this story has since been deleted). Not a good sign.
ConsenSys has Sold Out
This, coupled with movement of lucrative assets (MetaMask and Infura) from CAG to CSI meant “a de-facto liquidation of CAG, without the required consent of a shareholder meeting,” according to the shareholders’ press release.
This was, plaintiffs say, in breach of the directors’ duty to act in the company’s interests, considering it left shareholders holding equity in a company that didn’t actually own that much.
The shareholders asked anybody who holds or was promised CAG shares to contact them, vowed to “help all those who have been harmed,” and said they’re ready for upcoming court battles.
Let’s call it what it is, it’s crypto corruption at the highest levels.
ConsenSys also provides consulting services and develops software in support of central bank digital currency projects for clients including the Central Bank of Thailand and France’s Société Générale. ConsenSys has had been giving a lot of power to handle that must have been tempting to abuse that power.
According to a report from Arthur Falls, Ethereum venture production studio ConsenSys will face a billion-dollar audit. A majority of the company’s shareholders, Falls said, asked for this measure to investigate alleged irregularities at the company.
Why do rich guys look so evil? Joseph Lubin has a face full of immorality and guilt across his demeanor.
Say it ain’t so Joe? One has to wonder at the young people exploited by Joseph Lubin feel about his behavior.
Jamie Dimon it appears was pretending to be a crypto skeptic while building blockchain tech in his company and making secret deals. There’s hardly any other conclusion to reach here.
Is ConsenSys the Google of Crypto or is that Coinbase? ConsenSys’s name is a play on one of the key processes underpinning blockchain technology: “consensus algorithms,” software that helps coordinate records between the distributed nodes on a blockchain.
Why haven’t we been told the true nature of Project North Star? I thought blockchain was all about transparency and consensus in making decisions? I guess that was a myth as well. Shock and awe, but no surprises.
Internally code named "Project North Star", the transaction resulted in legacy financial institutions such as JPMorgan Chase acquiring an influential stake in MetaMask and Infura, two of the most widely used infrastructure tools in Ethereum. One year later, this intellectual property was used to raise funding for CSI at a valuation of $3 Billion, with rumors of a $7 Billion valuation for the current round.
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