Groq Board Sued by Former Engineers Over $20 Billion Nvidia Licensing Deal
Two former Groq engineers have filed a lawsuit in Delaware alleging that the company's board unfairly structured a $20 billion licensing deal with Nvidia to the detriment of common stockholders.
Former Groq engineers Benjamin Serebrin and Joshua Rubin filed a lawsuit in Delaware between October 3 and October 4, 2026, targeting the board of the AI chip startup. The plaintiffs allege that the board breached its fiduciary duty by improperly structuring a licensing arrangement with Nvidia valued at approximately $20 billion.
The deal, which closed in December 2025, was structured as a licensing agreement rather than a traditional acquisition. The transaction included $17 billion in cash licensing fees and a $3 billion Nvidia stock pool designated for roughly 200 Groq engineers who transitioned to Nvidia. Approximately 90% of Groq's employees moved to Nvidia as part of the arrangement, including founder and CEO Jonathan Ross and president Sunny Madra.
The lawsuit claims that common stockholders were undervalued while insiders received preferential treatment. The plaintiffs argue that by routing the deal through licensing fees and targeted equity grants, the board directed proceeds away from common shareholders, who typically hold the majority of employee and founder equity.
Groq continues to operate as an independent entity under new CEO Simon Edwards. The allegations made by Serebrin and Rubin have not been proven in court.
The transaction is also facing regulatory scrutiny. In September 2026, the US Department of Justice launched an antitrust investigation to determine if the deal bypassed premerger notification requirements mandated by the Hart-Scott-Rodino law.
The legal challenges highlight the complexities of the deal's structure, which occurred shortly after Groq raised $750 million at a $6.9 billion valuation in mid-2025. The $20 billion deal represented a significant increase over that previous valuation, but the lawsuit contends that the headline figure masks an uneven distribution of proceeds among stakeholders.
