A legal fight over the software infrastructure behind a large portion of crypto activity is heating up with a new Swiss court ruling seen first by POLITICO.

The fight pits billionaire Joe Lubin, considered a de facto co-founder of Ethereum, against a group of his former employees at ConsenSys AG, a firm that was central to the development of the second-oldest blockchain network.

While at one level the court battle comes down to a squabble over corporate governance and the value of some key assets, it can also be seen as emblematic of a bigger question shaping the world that crypto and Web3 evangelists hope to build: Should blockchain systems embrace existing corporate and government structures, or maximize their independence from them?

In the crypto world, a more pragmatic and business-minded camp sees the involvement of big banks and government entities as validation of the technology and a prerequisite for achieving its potential. Crypto purists, on the other hand, distrust those established players, and see their arrival as a threat to the original promise of the blockchain — by, for example, collecting user data or ensuring compliance with government regulations that the purists consider unjust.

The latest ruling prolongs a feud that has split an important group of early crypto pioneers.

The former employees of ConsenSys, who are also minority shareholders in the firm, contend that it improperly transferred some important assets to a separate entity now owned by Lubin and a who’s who of big-name investors including J.P. Morgan, Microsoft, Softbank and Singapore’s state-owned Temasek.

Those assets include MetaMask, a popular crypto wallet, and Infura, a suite of software tools for blockchain developers — meaning that those tools are now in the hands of a company backed by big financial powerhouses.

In March, the minority shareholders filed a request for a special audit of the deal. Soon after, it filed a demand that the transfer be put to a retroactive shareholder vote. Last month, in a previously unreported decision, a judge in the Swiss canton of Zug granted the former employees’ demand for that shareholder vote.

For the plaintiffs, the victory is merely tactical. Because Lubin himself owns the majority of ConsenSys AG shares, the vote is expected to ratify the transfer. But the decision paves the way for more legal wrangling, because the vote would produce a shareholder resolution that can be challenged in court, allowing the minority shareholders to press the substance of their legal challenge: that Lubin’s stake in the new entity represented a conflict of interest, and that the assets were purchased for too low a price — roughly $50 million.

“Any way you look at it, this is really, really bad management of our assets,” said Arthur Falls, one of the former employees who acts as a spokesman for the group. The group argues that the hundreds of millions of dollars invested into the new entity, ConsenSys Software Inc., since the transfer imply a much higher value for the assets.

In an emailed statement, a spokesperson for ConsenSys AG, which now does business as ConsenSys Mesh, denied the allegations, saying the transfer was conducted in consultation with top law firms and on the basis of an independent valuation by PwC. The statement contends that the price was reasonable at the time the transfer happened in 2020, during a moment of pandemic-induced economic uncertainty, before the latest crypto bull run and the NFT craze pumped the value of the assets to new highs.

A person familiar with Lubin’s side of the case, who spoke on the condition of anonymity to discuss a sensitive legal matter, said the employees had previously proposed multi-billion dollar valuations for the transferred assets in negotiations that preceded the legal action. The person argued that the plaintiffs were seeking publicity in order to force a settlement and said Lubin’s side was prepared to litigate.

The person described the attitude on Lubin’s side as, « Yeah, we’d like to settle. Yeah, we’d like to have discussions. If they’re not reasonable, we don’t really need to.”

The conflict highlights the industry’s rocky transition from its roots in scrappy, informal projects fostered by idealistic computer coders to a big global business. Falls said a privacy policy update issued last month that allows MetaMask to collect users’ IP addresses was emblematic of MetaMask’s turn away from crypto’s ideals under its new ownership.

Given the obstacles to reversing a complex, years-old transaction, it is unclear what the outcome of a successful legal challenge might entail.

The legal dispute highlights some of the bad blood that remains from the early days of one of the world’s largest crypto platforms. Lubin, a Goldman Sachs alum and early Bitcoin investor, plowed much of his personal fortune into ConsenSys, which was founded in 2014, and was instrumental in transforming Ethereum from an experimental software project to the foundation of a decentralized finance and decentralized internet ecosystem — often called Web3 — worth hundreds of billions of dollars.

People familiar with early days of ConsenSys described a chaotic, informal environment in which business was often done verbally. That left some people working with Lubin under the impression they were not given all of the compensation promised to them, while Lubin believed his singular contributions outweighed the complaints of other participants, these people said.

Among the parties who could be affected by the fight are the creditors of the bankrupt exchange FTX, whose ultimate ability to recover owed funds will depend on the outcome of several illiquid venture investments made by Sam Bankman-Fried’s imploded financial empire. A 2021 investment round advertised by ConsenSys included funding from Bankman-Fried’s defunct hedge fund, Alameda Research, which owes billions of dollars to FTX.

Falls, who is based in New Zealand, said the minority shareholders expect a ruling in the coming days on a related legal request, also made in Switzerland, for a special audit of the transferred assets.

He argued the stakes of the fight were about more than the spoils of one crypto firm, but about the direction of an industry that originally conceived itself as an alternative to the established financial system.

“It’s ridiculous,” Falls said, “to say Microsoft, Softbank and J.P. Morgan are the right custodians for the infrastructure at the heart of the Ethereum ecosystem.”