By Gerry Shih and Sarah McBride
SAN FRANCISCO (Reuters) - The chief operating officer for mobile payments company Square, Keith Rabois, abruptly resigned this week because an employee accused him of sexual harassment and demanded "millions of dollars" to stave off a potential lawsuit, Rabois said in a Friday blog post.
The revelation by Rabois, a well-known senior executive and active startup investor, caused a sensation in Silicon Valley and ignited a flurry of online chatter about Square, founded in 2009 by Twitter co-creator Jack Dorsey.
Rabois' case, which involved a same-sex relationship with a Square employee, follows another Silicon Valley workplace scandal eight months ago when Kleiner Perkins executive Ellen Pao alleged incidents of sexual harassment in a lawsuit against the high-powered venture capital firm for gender discrimination.
Kleiner has denied all of Pao's claims and the case remains in court.
In a lengthy Tumblr blog post, Rabois said he had been contacted by a New York attorney for his accuser, an unidentified male with whom he had a relationship beginning in 2010. Rabois, who recommended the man for a position at Square, said he was recently told his accuser would file a lawsuit alleging that their relationship was not consensual, and that Rabois did "horrible things," which Rabois did not spell out.
"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 wrote.
Rabois, 43, flatly denied the allegations and pledged to defend himself.
"The relationship was welcome," Rabois wrote. "While I have certainly made mistakes, this threat feels like a shakedown, and I will defend myself to the full extent of the law."
A lawyer by training, Rabois detailed how he met his accuser through mutual friends. Several months after the meeting and after they had spent time together, Rabois said he recommended his friend to the company, which hired him. It is unclear whether the accuser still works at Square.
"I realize that continuing any physical relationship after he began working at Square was poor judgment on my part," he wrote, adding that the company did not know of the relationship until the recent lawsuit threat.
Dorsey, who accepted Rabois' resignation late on Thursday, declined to comment on Friday.
Attempts to reach Steve Berger, the lawyer representing the unnamed accuser, on Friday were unsuccessful.