The chief operating officer for the mobile payment company Square, Keith Rabois, abruptly resigned after an employee accused him of sexual harassment and demanded "millions of dollars," he disclosed on Friday in a blog post.
The online revelation by Rabois, the well-regarded senior executive at the multibillion-dollar startup founded by Twitter Inc co-creator Jack Dorsey, caused a sensation in the close-knit Silicon Valley community and ignited a flurry of tweets.
In a lengthy Tumblr blog post, Rabois, 43, said he had been contacted by a New York attorney for his accuser, an unidentified male with whom he had a relationship. Rabois, who recommended the man for a position at Square, said he was told that his accuser would file a lawsuit saying that their relationship was not consensual, but did not elaborate on other allegations.
"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 said in his blogpost.
A lawyer by training, he detailed how he had met his accuser in 2010 through mutual friends. Several months after the meeting and after they had been spending time together, Rabois said he recommended his friend to the company, which hired him.
"I realize that continuing any physical relationship after he began working at Square was poor judgment on my part," he wrote in the blog post.
The company has retained San Francisco lawyer Richard Curiale to conduct an internal investigation into the matter.
Dorsey, who accepted Rabois's resignation late on Thursday, declined to comment on Friday.
The mobile payment company is one of Silicon Valley's hottest start-up companies, raising $200 million late last year in a funding round that valued the company at $3.25 billion valuation.
In August, Starbucks <SBUX.O> announced a deal to use Square's technology to process debit and credit card payments at the coffee chain's stores. Starbucks CEO Howard Schultz is a Square board member.
"We took these allegations very seriously and we immediately launched a full investigation to ascertain the facts," Square spokesman Ricardo Reyes said in a statement.
The company said it has not found any evidence to support any of the claims, but added, "Keith exercised poor judgment that ultimately undermined his ability to remain an effective leader at Square."
Rabois said that the recent events were "the toughest, saddest, most frightening, and emotionally draining of my life."
A former executive at eBay-owned PayPal <EBAY.O> who has a law degree from Harvard Law School, Rabois joined Square in 2010.