The Founding Engineer (aka First Engineer?) needs to be removed. Speak with the CEO and CTO, surface your concern.

Having been in the CXO shoes before, I would have let the Founding Engineer go. Awesome if they give us a few weeks (fully paid of course) to KT to you.

At a startup, esp. of this size, team cohesion is critical and this person is a no go.

If you don't want to do this, you should still inform them after you resign because they have to sketch a plan for replacement of this Founding Engineer anyways.