ConsenSys Faces Audit On Swiss Judge Order After Laying Off 11% Of Employees

Ethereum development company ConsenSys is facing an audit investigation on the order of a Swiss judge who approved the company's shareholders' request.

On Jan. 5, the Supreme Court of the Canton of Zug ruled in favor of the shareholders' request to audit the founding transaction of ConsenSys, a Swiss-based blockchain technology company, Finextra, a London-based newswire reported.

The company, via a transaction dubbed "Project Northstar," allegedly moved business units and products between its Switzerland and U.S.-based businesses that allowed the company's U.S. division to raise $715 million from 2022 up to 2022.

The shareholders claimed that the company did not consult them about the transaction and alleged that it was conducted in a covert manner. They said they were only made aware of it when it was brought to light in the media because of the company's illegal suspension of its general shareholder meetings.

The shareholders also contended that the company ignored their request for clarity about the transaction, which includes information on the value of the transferred assets and their origin.

The controversial transaction was allegedly authorized by ConsenSys CEO Joseph Lubin, who was the only remaining member of the firm's board of directors at the time, with a group of 35 employees making up over 50% of shareholders, previous reports said.

The request for an audit was filed in March 2022 and the judge approved the request earlier this month.

The latest news about ConsenSys surfaced after the company confirmed that it is shedding 11% of its workforce to help reduce operating expenses while boosting the strength and focus of the teams.

"Today we need to make the extremely difficult decision to streamline some of ConsenSys' teams to adjust to challenging and uncertain market conditions," the ConsenSys CEO said in a blog post released Wednesday.

"This decision will impact 96 employees, which represents 11% of ConsenSys' total workforce. We are extremely grateful for their contributions and the work they've accomplished. Each of the impacted employees will be notified today by their manager," Lubin added.

The executive enumerated several factors that caused the current bear market, propelling ConsenSys to reduce its workforce.

"While I've often said that the fear and greed cycles are shortening in duration, our current bear market also coincides with a very challenging macroeconomic environment driven by surging inflation, lagging economic activity, and increased geopolitical unrest. And against that backdrop, some of the poorly behaved CeFi actors in our space have brought a reckoning on themselves which has cast a broad pall on our ecosystem that we will all need to work through," Lubin said in the blog post.