Square COO Rabois resigned following harassment claim

The surprise departure of Square chief operating officer Keith Rabois is now less of mystery after the mobile-payment-processing company confirmed the high-profile executive is currently facing accusations of sexual harassment from a Square employee.

Rabois, who joined Square in August 2010, is being accused of engaging in a nonconsensual sexual relationship with a male colleague he had helped to get a job at the startup.

Rabois and Square first learned of a pending lawsuit when a New York attorney contacted Square earlier this month, the Wall Street Journal first reported Friday afternoon.

"The first we heard of any of these allegations was when we received the threat of a lawsuit two weeks ago," Square spokesperson Ricardo Reyes told CNET. "We took these allegations very seriously and we immediately launched a full investigation to ascertain the facts. While we have not found evidence to support any claims, Keith exercised poor judgment that ultimately undermined his ability to remain an effective leader at Square. We accepted his resignation."

Rabois adamantly denied the sexual harassment claim in a statement. He indicated that his resignation was meant to help the company avoid additional distraction.

"I did not do the horrendous things I am told I may be accused of. While I have certainly made mistakes, this threat feels like a shakedown, and I will defend myself to the full extent of the law," Rabois wrote in a post published to his personal Tumblr account.

In the post, Rabois went into further detail about the situation, which he said began when he formed a friendship with a man he was introduced to in May 2010. The pair spent an increasing amount of time together and developed a "physical relationship" before Rabois later recommended the man for a position at Square, where he was eventually hired, Rabois wrote.

"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," he wrote. "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."

Square surprised the technology world Friday when it announced that Rabois, an esteemed industry veteran who previously worked at PayPal and LinkedIn, was leaving the company. His post will be temporarily filled by chief financial officer Sarah Friar.