Emad Mostaque—Sued by co-founder for fraud after buying his 15% stake for $100
In July 2023, Stability AI co-founder Cyrus Hodes filed a civil lawsuit against Emad Mostaque claiming fraud. Hodes alleged Mostaque 'brazenly deceived' him about the company's value and purchased his entire 15% stake for $100 - a stake worth approximately $150 million five months later when Stability raised $101M at a $1B valuation. Hodes also accused Mostaque of embezzlement, including using company funds for personal rent.
Scoring Impact
| Topic | Direction | Relevance | Contribution |
|---|---|---|---|
| Corporate Governance | -against | primary | -1.00 |
| Overall incident score = | -0.858 | ||
Score = avg(topic contributions) × significance (high ×1.5) × confidence (0.57)
Evidence (1 signal)
Sued by co-founder for fraud after buying his 15% stake for $100
In July 2023, Stability AI co-founder Cyrus Hodes filed a civil lawsuit against Emad Mostaque claiming fraud. Hodes alleged Mostaque 'brazenly deceived' him about the company's value and purchased his entire 15% stake for $100 - a stake worth approximately $150 million five months later when Stability raised $101M at a $1B valuation. Hodes also accused Mostaque of embezzlement, including using company funds for personal rent.