Two former engineers of Groq Inc., an artificial intelligence chip startup, have initiated legal action against the company’s board and a former officer in Delaware Chancery Court. The lawsuit alleges that Groq’s leadership improperly transferred the company’s technology and key engineering personnel to Nvidia Corporation through a transaction valued at approximately $20 billion, without obtaining stockholder approval or conducting a process to secure the best possible price.
The plaintiffs, Joshua Rubin and Benjamin Serebrin, contend that the deal, announced on December 24, 2025, was structured as a non-exclusive licensing agreement. This arrangement allowed Nvidia to license Groq’s inference technology and hire several of its employees, including founder Jonathan Ross and President Sunny Madra. Despite these significant transfers, Groq stated it would remain an independent entity under the leadership of CEO Simon Edwards and continue operating its GroqCloud platform. ([techcrunch.com](https://techcrunch.com/2025/12/24/nvidia-acquires-ai-chip-challenger-groq-for-20b-report-says/?utm_source=openai))
The lawsuit claims that the board’s actions effectively sold Groq’s core assets and top staff, leaving the company significantly weakened. The plaintiffs argue that common stockholders were undervalued and cashed out cheaply, while insiders received preferential treatment. They also allege that the licensing fee was taxed as income and that some stockholders were denied a vote on the transaction. Furthermore, the complaint points to potential conflicts of interest within the board, highlighting investment funds with board designees that may have benefited disproportionately from the deal. ([suggestedtech.com](https://suggestedtech.com/news/groq-lawsuit-explained-what-the-nvidia-deal-fight-means?utm_source=openai))
In response to the lawsuit, Groq has dismissed the claims as meritless, asserting that the licensing agreement with Nvidia delivered exceptional value to the company. Nvidia has declined to comment on the ongoing litigation. ([zetik.com](https://www.zetik.com/news/article/story_id-p008-221538?utm_source=openai))
This legal challenge comes amid broader scrutiny of similar transactions in the tech industry. The U.S. Department of Justice has reportedly opened an antitrust investigation into the Nvidia-Groq deal, examining whether the arrangement was structured to circumvent premerger notification requirements under the Hart-Scott-Rodino Act. Such “reverse acqui-hire” deals, where a company acquires another’s assets and talent without a full acquisition, have raised concerns about potential antitrust implications and the treatment of minority shareholders. ([indiekings.com](https://www.indiekings.com/2026/09/doj-probes-nvidia-20-billion-groq-deal.html?utm_source=openai))
The outcome of this lawsuit could have significant implications for corporate governance and shareholder rights, particularly in the rapidly evolving AI and semiconductor sectors. As the case progresses, it will be closely watched by industry observers and legal experts alike.