[hellocs1]

Could they dilute people like that? From 5% to 0.5%? That dilutes everyone else as well though, right (I guess the new shares can be given to the founders so they aren't diluted).

[quaquaqua1]

Exactly, yes. Founders can give themselves 1,000,000 shares to prevent dilution while giving previous equity holders 0.

It's quite an interesting deception if it isn't explained transparently!