“Cyrus Hodes accused Mostaque, who is also named in a lawsuit filed in a U.S. federal court on Thursday, of convincing him that Stability AI was worthless and hiding the company’s work on what became the popular image generator, Stable Diffusion.”
Cyrus Hodes sold a 15% stake in Stability AI to CEO Emad Mostaque for $100. The company then raised $101 million and went shopping for a $4 billion valuation. Stability says the suit is without merit. It also burns cash, struggles to make revenue, and recently raised $25 million in a convertible note, so the stake was worth more on paper than in the bank.