Crypto Started With Grand Dreams, Then Backroom Deals. Now It’s Mired in Lawsuits

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.”