Stability AI is sued by co-founder Cyrus Hode, claiming that the current CEO defrauded 15% of its shares.

CTOnews.com Stability AI co-founder Cyrus Hode sued the artificial intelligence startup and its CEO Emad Mostaque on Thursday, claiming that Emad Mostaque cheated him into selling his 15% stake in Stability AI for a total of $100, Reuters reported.

In a lawsuit filed in federal court in San Francisco, Cyrus Hodes said Stability AI's current CEO, Emad Mostac, had previously told him that the image generator Stable Diffusion Emad Mostac was working on was "basically worthless" and that it was better to sell shares in the company in exchange for more opportunities. Cyrus Hodes therefore believes that Emad Mostaque deceived him.

Emad Mostaque's actions "epitomize corporate greed at its worst and shock conscience," Cyrus Hodes wrote in an indictment. He also said that until Emad Mostaque bought his stake in October 2021 and May 2022, Emad Mostaque never disclosed that he had begun contact with venture capital firms.

Cyrus Hodes wants to recover his 15% stake in Stability AI, as well as punitive damages from Emad Mostaque for "alleged fraud and breach of fiduciary duty."

CTOnews.com learned after inquiry that the current CEO of Stability AI Emad Mostaque's evaluation is not good, Forbes previously criticized Emad Mostaque's Stable Diffusion source code is actually written by another group of researchers, and Mostaque took someone else's work but wrote his name on it, and with his extraordinary oral skills, Stability AI turned into a start-up company valued at $1 billion.

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