Square's COO Keith Rabois Denies Sexual Harassment Allegations, Quits The Payments Company

Rabois wrote a blog post explaining why he's leaving the company while battling allegations of sexual harassment, which he vigorously denies.

On Friday, Square Chief Operating Officer Keith Rabois released a statement on his Tumblr saying that he resigned from the company due to a threatened lawsuit against him that will claim he forced an employee of Square to engage in a sexual relationship with him. In the statement, Rabois said:

In May 2010, I met someone via mutual friends. With increasing frequency, we hung out, drank wine, and I helped prepare him for interviews with tech startups. As our friendship deepened, we spent more time together, and our relationship became physical. We regularly worked out at the gym, occasionally hung out at my home, and exchanged intimate, personal information, as people in similar relationships often do.

Several months after our relationship began, I recommended that he interview at Square. He went through the interview process and was ultimately hired. I had no impact on his potential success at the company. At no point did he ever report directly to me, and I have seen his work product less than a handful of times.

Last week, a New York-based attorney threatened Square and myself with a lawsuit. I am told this lawsuit would allege that the relationship was not consensual, and would go on to accuse me of some pretty horrible things. I was told that only a payment of millions of dollars will make this go away, and that my career, my reputation, and my livelihood will be threatened if Square and I don’t pay up.

Rabois went on to say the relationship was consensual, and he called the threatened lawsuit a "shakedown," adding, "I decided to resign from Square so my colleagues could continue to do great work without the distraction that a lawsuit would most certainly bring."

Earlier, Square released a statement saying that Rabois was leaving the company. It lavished praise on Rabois but refrained from saying why he left.

Rabois, AllThingsD pointed out, had simply said that "it is better at this point for me to be doing something different every day" and that he thinks Square has a great future. Square's CFO Sarah Friar will become acting COO, the company said.

The move sparked intrigue before Rabois's revelation, partly due to the lack of details and partly because it was surprising. Square's boss Jack Dorsey was a famously difficult character, but his firm has been gently but persistently growing over recent months—which seems to indicate no immediate flaws in its operations.

[Ed. Note: This story was updated from an earlier version after Rabois explained his departure via a Tumblr post.]

[Image: Flickr user shardayyy]

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