A former SandboxAQ executive filed a wrongful termination lawsuit this month, alleging such scandalous charges about the company’s legendary CEO, Jack Hidary, that the plaintiff himself censored the most revealing parts.

On Friday, the company’s lawyers issued a harsh rebuttal, labeling the former employee a “serial liar” and claiming that his complaint “asserts false claims for improper and extortionate purposes.”

The case provides a rare inside look at how employee lawsuits can turn into a public airing of dirty laundry from normally opaque internal happenings, according to the common private arbitration clauses in Silicon Valley employee agreements.

Robert Bender filed the lawsuit in mid-December. Bender worked as Hidary’s Chief of Staff from August 2024 to July 2025, according to the allegation. He says in his lawsuit that he was unlawfully terminated after voicing concerns about a number of purported instances, some of which he claims involved “sexual encounters” and others involving deceptive financial information presented to investors.

SandboxAQ, for its part, has categorically denied the charges. Orin Snyder, a well-known attorney at white-shoe law firm Gibson Dunn, tells TechCrunch that the case is a pure fabrication. We look forward to proving these unfounded charges and exposing the lawsuit, as described in our response, for what it is: an opportunistic and extortionate abuse of the court process.”

What makes the case stand out is the amount of Valley heavyweights involved with SandboxAQ. The firm is an AI quantum computing startup that began as a moonshot unit of Google parent company Alphabet, which is run by Hidary. Hidary is also well-known in Silicon Valley as a long-standing X Prize board member.

SandboxAQ was spun off from Alphabet as an independent company in March 2022, with Hidary as CEO, and quickly attracted high-profile investors, including billionaire and former Google CEO Eric Schmidt, who invested and became the startup’s chairman. Other billionaire investors include Salesforce CEO Marc Benioff, venture capitalist Jim Breyer, and Ray Dalio, the founder of Bridgewater hedge fund.

Bender’s lawyers claim in another court document that the censored passages “describe sexual encounters and the physical condition of non-party individuals observed by Plaintiff during business travel.” In other words, the alleged instances involve people whom Bender is not suing. This is an unusual approach; usually, the party being sued wants redactions, not the individual making the charges.

There are various justifications for such an approach, and TechCrunch was unable to determine the intentions in this situation. In general, the options range from safeguarding innocent third parties who have not been accused of crime to using a shakedown tactic, which indicates that more damaging details may emerge if the defendants do not give an acceptable settlement.

The unredacted section of the suit includes a few more general specifics about the claims that were hidden: Bender claims that Hidary utilized corporate resources and investor monies to “solicit, transport, and entertain female companions.” In an attached text message from Bender, he discusses prostitutes.

Bender also claims in his lawsuit that Hidary sold tens of millions of dollars’ worth of his stock at a premium price based on what he claims were deceptive data offered to prospective investors. He claims in the lawsuit that the revenue estimates submitted to the board were 50% lower than those shown to prospective investors.

SandboxAQ’s lawyers fiercely dispute all of the foregoing. “The Company did not make any deceptive disclosures to investors about its tender offer or otherwise. The CEO did not mishandle corporate assets. Plaintiff made these inflammatory charges to create statutory claims and shield himself from the repercussions of his own wrongdoing.”

Bender, for his part, claims that the firm has been attempting to malign him. His complaint states that he filed the action “only because his termination was followed by a malicious scorched earth campaign to destroy his reputation.”

While the authenticity of any of these allegations must be determined by a jury, many of his claims are similar to an investigation of SandboxAQ published by The Information in July.

According to sources, Hidary used company resources to transport ladies he was dating on corporate jets, and the company’s revenues were far lower than expected. Bender mentions The Information story in his complaint but denies being a source for it. SandboxAQ claims he was a source and is lying about his role.

Despite the controversy, major investors were keen to participate in the company last year. SandboxAQ raised more than $450 million in Series E fundraising in April, with participation from Ray Dalio, Horizon Kinetics, BNP Paribas, Google, and Nvidia.

SandboxAQ also announced a $90 million secondary offering. SandboxAQ has raised a total of $1 billion and is valued at $5.75 billion, according to PitchBook.