For a moment I decided to move on. Now I got know that some team members now face same issue.

Company still operates and continues "product development" with rest of dedicated team.

Thanks for pointing that, this can help.

Around 40k. I'd be happy to give that money to lawyer if he's going to be punished. It's not only about money, it's about time wasted :/.

unfortunately a ton more time will be "wasted" dealing with this ..

Thank you!

Yes, we're looking into that. Agreement says that its regulated by Delaware law and hearings should be done there.

Agreement states that we're independent contractors, but scope of work section tells:

  As a Software Engineer at %company name% you will be developing 
  applications for the %company name% Platform.
  
  Your starting date will be %date%. You will work as a full-time member 
  of the team from %my location%. Full-time member assumed 
  to be working five days in a week (Monday till Friday), 8 hours a day.

Depending on what you did and the conditions of how were supposed to do your work, you may actually be classified as an employee. Even if you were given a 1099 if your in the USA depending on what you actually did or certain requirements from your employer it might have made you a W-2 employee.

If you were improperly classified the employer owes back taxes, medicare, social security and a whole range of other payments to you and to the state and federal government. If this is the case make a call to the IRS they love hearing stories like these, they will send the Uncle Sam team out to help get some clarification on the matter.

Agree that he's most likely legally an employee, not a contractor, regardless of what the employer insists. Report to every agency you can.