Joshua Rubin and Benjamin Serebrin had left Groq before its Nvidia agreement was announced, yet each retained stock in the AI chip startup. On Oct. 2, they took that stake to Delaware’s Court of Chancery, suing Groq’s board over a deal they say left common stockholders without a vote and with too little value.
The case challenges a transaction that Groq disclosed in December: a $20 billion licensing agreement under which Nvidia obtained rights to Groq’s inference technology. The complaint alleges that the board bypassed a stockholder vote required under Delaware law and undervalued the company’s assets.
Its arithmetic is central to the dispute. Nvidia allocated $17 billion to a non-exclusive licence, while another $3 billion was set aside in restricted stock units for Groq engineers who joined Nvidia. Rubin and Serebrin contend that this structure squeezed out stockholders by setting too low a price for the assets and directing value towards employees moving to Nvidia.
When the deal closed, Groq founder and chief executive Jonathan Ross, President Sunny Madra and between 150 and 200 engineers moved to Nvidia. Jensen Huang has described the arrangement as a licence for Groq’s intellectual property rather than a purchase of the company.
The plaintiffs say Groq’s directors approved the transaction without adequately testing the market value of the assets involved. They also allege that conflicts involving directors cost stockholders billions.
Groq rejects the claims. A spokesperson said: “Our licensing agreement with NVIDIA delivered exceptional value for Groq, our investors, and our employees. This lawsuit is meritless and we will vigorously defend ourselves against it.”
The company has maintained that it remains a standalone business and has brought in roughly $1 billion in new funding since June. Nvidia’s Groq 3 LPX inference chip, built on technology from the transaction, entered full production earlier this year. The chip is packaged into racks of 256 individual units on Nvidia’s Vera Rubin platform.
The lawsuit turns on a Delaware corporate governance question: when a transfer of core assets requires stockholder approval. It also arrives amid broader concern over acquihires, arrangements that combine technology and talent transfers without a traditional company takeover. Senators Elizabeth Warren, Richard Blumenthal and Ron Wyden said earlier this year that acquihires appear designed to evade antitrust scrutiny.
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