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Stability AI was sued by co-founder Cyrus Hode, claiming that the current CEO defrauded it of 15% of its shares
Stability AI co-founder Cyrus Hode sued the company and its CEO Emad Mostaque on Thursday, Reuters reported. Cyrus Hode alleges that Emad Mostaque tricked him into selling his 15 percent stake in Stability AI for a total of $100 three months before the company hit a $1 billion market valuation.
Cyrus Hodes said in the lawsuit that Emad Mostac had previously convinced him that Stability AI was “intrinsically worthless,” even though Mostac was developing Stable Diffusion, a popular image generator. In this regard, Cyrus Hodes wants to restore the 15% stake in Stability AI and seeks punitive damages from Emad Mostaque for “alleged fraud and breach of fiduciary duty”.