Joel Dietz says crypto is rotten, and he’s going to court to try to prove it. Dietz is a self-described “founding member” of Ethereum, the computer network on which the world’s second-largest cryptocurrency is housed. He didn’t pen the code, but in 2014, before Ethereum had launched, he worked as an evangelist of sorts, “showing people how it worked and why it was important,” Dietz says. He received a batch of cryptocurrency in return.
In the early days, working in crypto felt like “building the future of the internet,” says Dietz. It was about transparency, egalitarianism, and decentralization (crypto shorthand for transferring control over apps and infrastructure from the few to the many.) Dietz believed that open source—the practice of making software code available for anyone to see, use, and riff upon—could usher in this new dawn. “But things have gone offtrack from the original vision,” he says. “There’s a rotting body here, and it smells.”
In a state court in California, Dietz is suing former collaborator Aaron Davis for allegedly swindling him out of an ownership stake in MetaMask, an Ethereum-based crypto wallet, as part of the kind of “seedy backroom deal,” says Dietz, that has become “endemic” in crypto. Named as codefendants are Dan Finlay, with whom Davis publicly partnered on MetaMask; Consensys, the software company that owns the wallet; and Joe Lubin, Ethereum cofounder and Consensys CEO.
In a statement given to WIRED, Finlay dismissed the lawsuit as “baseless.” Dietz has been “falsely marketing himself” as a founder to garner the respect of prospective investors, he said, but “has no relation to MetaMask or any of its technology.”
Dietz is certainly after financial compensation. In March of 2022, Consensys was valued at $7 billion, and MetaMask is among its most successful products. But, Dietz claims, the lawsuit is a small way of drawing attention to the state of crypto, which has been blighted by a series of legal battles, many of which boil down to an abuse of power or position. US regulators have filed civil charges against the world’s largest crypto exchanges—among them Binance, Coinbase, and Gemini—which are alleged to have either misled, mistreated, or endangered crypto investors. In July, Alex Mashinsky, founder of crypto lender Celsius, was charged by the US Department of Justice with “orchestrating a scheme to defraud customers.” Earlier this month, Sam Bankman-Fried, once the golden boy of crypto, was found guilty of overseeing a multibillion-dollar fraud at his FTX exchange. In these cases, decentralization was a mirage.
“The industry needs cleaning up,” Dietz says. “It’s embarrassing.”
MetaMask is a crypto wallet in the form of a web browser extension. It lets users hold crypto tokens compatible with Ethereum, of which there are thousands, and interact with software that runs on the network. Over time, it became a foundational piece of crypto infrastructure, used by more than 100 million people. Dietz says he came up with the idea.
In early 2015, claims Dietz, he recruited Davis to work on a browser-based crypto wallet, codenamed Vapor. Davis handled the coding with a third individual, Martin Becze, while Dietz’s role was “that of a high-level visionary, conceptual designer and assisting with securing short-term funding,” the complaint states. Becze could not be reached for comment.
The lawsuit centers on the following allegations: When funding did not materialize, Davis stopped communicating with Dietz but quietly continued to work on the project with a new collaborator, Finlay. At some unknown date, the pair either sold or transferred ownership of the company, which they had by then named MetaMask, to Consensys, run by Lubin. In the period since, Davis, Finlay, and Lubin have taken steps to erase Dietz’s involvement in the project from the public record.
Through the Consensys communications department, the trio declined to be interviewed for this story and did not respond to written queries. But in an interview with another outlet in late 2021, Davis intimated that he had come up with the idea for an Ethereum wallet before working with Dietz. In a blog post published in July 2022, Consensys presented its own version of MetaMask’s origin story: Davis and Finlay wanted to build a web service atop Ethereum but found no existing login technology that was sufficient—so they “worked backwards from there” to develop MetaMask.
The case will come down to two questions, says Yar Chaikovsky, global head of intellectual property at law firm White & Case, which represents neither the plaintiff nor the defendants. The first: Was a partnership ever established between Dietz and Davis? The second: By what date should Dietz have realized his ownership interest in MetaMask had been taken from him, if that’s what occurred?
The original Vapor collaborators did not sign a traditional contract. Dietz claims a partnership was formalized in a series of Slack messages, which he no longer has access to. Andrew Cook, who worked with Dietz at Swarm, a startup whose Palo Alto office was used by the Vapor team, says he observed the group working on the crypto wallet. “Joel completely came up with it,” he says. Cook says he sifted through LinkedIn with Dietz in early 2015 in search of developers to build Vapor, eventually landing on Davis. MetaMask was practically “a direct copy,” he claims.
WIRED has seen two applications for funding in relation to Vapor, bearing the names of Dietz and Davis, submitted to the nonprofit Ethereum Foundation and the Y Combinator accelerator program in spring 2015. In a video sent to Y Combinator, the team pitched the idea to “marry the browser and the blockchain.”
Dietz became aware that Davis was working on what he considered a reskinned version of Vapor as early as November 2015, when Davis presented MetaMask at a conference. But it wasn’t clear that his ownership interest would be contested, Dietz claims. Consensys operated under an unconventional hub-and-spoke structure, whereby a multitude of software projects, or spokes, were incubated by a central entity, the hub. In a very crypto way, the structure was supposed to replace top-down decision-making with a more fluid arrangement—to “create a mesh of autonomous projects and companies,” in Lubin’s words. But it was a “very confusing structure,” says Dietz, that left him with the belief he still held a stake in the wallet, as MetaMask.
It wasn’t until 2021 that Dietz began to suspect his ownership interest had been denied him, the complaint states, when Consensys “threatened” a journalist at crypto media outlet Cointelegraph who had published a story that described Dietz as a cofounder of MetaMask. The journalist, Jillian Godsil, says she didn’t feel threatened, but that Consensys representatives were “quite officious” and “more aggressive than they needed to be.” Cointelegraph ultimately amended the story, but Godsil maintains that Dietz contributed to what later became MetaMask, in some way. “I would say he was part of the thinking process,” she says. “He is important in the history of crypto.”
Despite what appears to be evidence of a partnership, says Chaikovsky, there is an opening for the defense to contest the idea that Dietz was unaware of wrongdoing until six years after the alleged theft. The date is relevant because it will determine when the statute of limitations kicks in. In California, disputes over breaches of contract and fiduciary duty must be lodged within four years, or else the plaintiff forfeits their right to a grievance. Dietz is effectively saying the countdown should begin in 2021, but in a court filing on November 6, the defendants described the complaint as “woefully untimely.”
“This is ultimately going to be a dispute about when the clock starts ticking,” says Chaikovsky. “The statute of limitations is there to ensure parties don’t wait until something succeeds to file suit. You file a suit when you have a problem, not when you have a valuable problem.”
For now, the case is stuck in a holding pattern. The defendants have moved to have 13 of the 15 claims filed by Dietz dismissed on the grounds that the California court lacks jurisdiction. A hearing on December 13 will determine whether the motion is valid, before the rest of the case can proceed.
But Dietz is not the only person suing Consensys at present. A second lawsuit in New York shares the same overarching theme: the right to ownership. In October, a group of 27 former Consensys employees filed a case alleging that Lubin and others had deliberately devalued their equity in the company by stripping its most valuable assets (including MetaMask) and transferring them to a new entity, Consensys Software Inc.
According to the suit, the plaintiffs joined Consensys in its early stages, between 2015 and 2016, before it began to generate significant revenue. They were convinced to gamble on an uncertain future at the startup, the complaint states, by promises of equity made by Lubin.
But the same unconventional corporate structure that confused Dietz was manipulated, the former employees claim, to cut them out of the picture. “We allege that Joe Lubin created different corporate forms in a way designed to maximize his own personal benefit and escape from what he owed our clients,” says Justin Nelson, partner at law firm Susman Godfrey and counsel to the plaintiffs. “The hub-and-spoke system was more than a metaphor. This was supposed to be a new way of thinking that would bring the world together. But when it came down to it, as we detail in the complaint, he stripped the assets.”
The same plaintiffs are pursuing separate legal action in Switzerland, where the original entity, Consensys AG, was registered, in a bid to have the transfer of MetaMask and other assets to Consensys Software Inc. reversed.
In an email statement, Elo Gimenez, global PR director for Consensys Software Inc., said the company is the target of “a series of baseless legal actions by a small group of disgruntled minority shareholders” of the separate entity. “Consensys Software will vigorously defend itself against this meritless lawsuit,” she said. In a separate statement, Diana Richter, head of marketing at Consensys AG, said the organization “refutes the allegations underlying the legal actions and looks forward to prevailing in Switzerland, the United States, and any other jurisdiction where these baseless accusations are made.”
Dietz has not given up on crypto, but he believes the idea that everything could be made better with a “pure technology approach” has been categorically disproven. “The model—technology without law and control—attracts a lot of bad actors,” he says.
There is no guarantee that either Dietz or the former Consensys staff will prevail in their respective lawsuits. But regardless of the outcome, the accusations leveled via the cases gesture to themes that have defined the latest chapter in crypto’s short history: chicanery and profiteering, concealed by a veneer of decentralization.
Across the industry, says Dietz, there is a habit of “selling one thing publicly and doing something else in private.” In his naivety, it wasn’t until too late, he says, that he realized “the truth could be so far from the rhetoric.”
