Two former Groq engineers, Benjamin Serebrin and Joshua Rubin, have sued Groq's board of directors in Delaware, alleging the board favored insiders in the roughly $20 billion deal struck with Nvidia last year, shortchanging other shareholders. Both are also Groq shareholders. Multiple outlets reported on the lawsuit on October 5.
A Deal That Wasn't Quite an Acquisition
Rewind to December 2025. Nvidia and Groq announced an agreement: Nvidia received a non-exclusive license to Groq's inference technology, a group including founder Jonathan Ross and president Sunny Madra moved over to Nvidia, and Groq kept operating GroqCloud as an independent company.
According to public reporting, of the roughly $20 billion, about $17 billion was a cash licensing fee, while another roughly $3 billion was a separate Nvidia stock award pool for the roughly 200 engineers who moved over. Reports say about 90% of Groq's employees ultimately went to Nvidia. For context, Groq's mid-2025 funding round had valued the company at $6.9 billion.
What the Plaintiffs Are Disputing
Per the complaint as described in reporting, the money took two separate paths. The licensing fee went to the company and was then distributed to all shareholders according to their equity stakes; the stock award pool went directly to the group that moved to Nvidia. The plaintiffs argue the board breached its fiduciary duties in designing this structure, letting insiders and the employees who moved to Nvidia take a larger share while ordinary shareholders who stayed behind got less.
As previously reported, Groq distributed its first payment to shareholders back in February, about $7.6 billion, or roughly $64 per share. Public reporting doesn't specify how much the plaintiffs believe they were shortchanged or how much compensation they're seeking. Neither Groq nor Nvidia has publicly responded.
Comparing a Few Similar Deals
The "license plus hire" structure has shown up a few times before, starting in 2024. Public reporting shows Microsoft paid about $650 million to Inflection AI for a model license while bringing over both co-founders and most of its staff; Google signed a licensing agreement with Character.AI and brought back co-founder Noam Shazeer, in a deal reported at about $2.7 billion; Amazon used a similar approach to absorb Adept's founding team.
These deals share one thing in common: none went through a formal merger filing. Lined up against them, the Nvidia-Groq deal is the largest by reported value so far — roughly 30 times the size of the Microsoft-Inflection deal, by a rough reckoning of the reported figures.
Regulators are already looking into this. Bloomberg reported in September that the U.S. Department of Justice sent Nvidia a request for information, examining whether the deal was deliberately structured as a license-plus-hiring arrangement to sidestep the pre-merger filing requirement under the Hart-Scott-Rodino Act. Under that law, a direct Nvidia acquisition of Groq would have had to clear antitrust review before closing. In March, Senators Elizabeth Warren and Richard Blumenthal also wrote to Nvidia about the deal's structure, asking whether it was designed to avoid review. The DOJ hasn't publicly confirmed the specific scope of its inquiry.
The Scrutiny Has Shifted Direction
Earlier questions about this kind of deal came from regulators and Congress, focused on competition. This lawsuit comes from the company's own shareholders, focused on how the money was divided. Both point to the same underlying issue: under a license-plus-hire structure, the two parties to the deal get to design where the money and people go, leaving little room for outside regulators — or shareholders left behind at the original company — to weigh in beforehand.
The Delaware suit has just been filed. How the board responds, and whether the court will require disclosure of the valuation basis used at the time, remains to be seen.
Sources: Crypto Briefing, TokenPost, CocoLoop, Bloomberg, TechTarget; the deal value and stock award pool figures follow public reporting, and DOJ investigation details are per Bloomberg's reporting.