Ethereum's Internal Disputes Go Public as Former Employee Takes Legal Action

The Ethereum Foundation and co-founder Vitalik Buterin are facing a lawsuit from a former employee who alleges she was wrongfully dismissed after challenging a controversial commitment included in the organization's updated internal mandate.

Kayleen Fulton, who is also known online as “Nixo,” filed the complaint on November 4 in Colorado. The defendants named in the case include the Ethereum Foundation, its Singapore affiliate, executive Bastian Aue and Buterin.

The lawsuit centers on Fulton's dismissal on April 6 and a dispute over the Foundation's updated mission statement, known as the EF Mandate. Fulton alleges that she was fired in retaliation for organizing employee opposition to certain conditions in the document. She also raises claims involving disability discrimination and interference with medical leave rights, following the disclosure of her cancer diagnosis around the same period.

Controversial language in the Ethereum Foundation mandate

Published on March 13, the EF Mandate sets out the Foundation's role in supporting Ethereum's long-term development and reinforces its commitment to four core principles: censorship resistance, open source, privacy and security, collectively known as CROPS.

However, one section of the document became a central point of contention.

The so-called “Source Seppuku License” included language stating that employees who failed to uphold their commitment to Ethereum would “take his or her own life with a sword.”

According to the complaint, employees were asked to either affirm their commitment to the Foundation's direction or leave the organization.

The filing acknowledges that Aue subsequently clarified that the reference to seppuku was not intended literally. He reportedly emphasized that the commitment had nothing to do with actual seppuku.

Despite that clarification, Fulton and colleague Trent Van Epps objected to aspects of the mandate. The two organized a letter supporting the Foundation's broader direction while challenging some of the conditions attached to the commitment. The letter reportedly attracted 53 signatures.

Fulton alleges that the resulting pushback led to her and Van Epps being unlawfully terminated.

Lawsuit cites recorded conversation with Vitalik Buterin

The complaint also references a conversation between Fulton and Buterin on May 1, which Fulton partially recorded.

The filing does not establish whether Buterin knew that the discussion was being recorded or consented to it. It notes, however, that the conversation took place in Norway, where recording a conversation with the consent of one participant is legal.

According to the complaint, Buterin questioned the potential consequences of allowing employee protests to influence management decisions.

He is quoted as saying that “if you reward making a stink with outcomes,” employees could use that approach to exert influence over the Foundation.

The exchange is presented in the lawsuit as part of the dispute surrounding the employees' objections and the circumstances of Fulton's departure.

Fulton challenges separation agreement and seeks damages

The complaint also disputes the circumstances surrounding Fulton's departure agreement.

Fulton alleges that she was offered compensation equivalent to one year's salary in exchange for signing a separation agreement. She claims she signed the release under duress, received no payments and later withdrew her agreement.

Her lawsuit seeks an unspecified amount in damages and lost wages.

The Ethereum Foundation lawsuit places the Foundation's internal management practices under scrutiny, particularly how an organization committed to decentralization handles employee dissent and institutional decision-making.

However, the allegations remain claims made in a court filing. The lawsuit does not establish that the Foundation or the individuals named acted unlawfully, and the defendants' responses have not been reported yet.