No, it's not. It means the relationship between the cofounders is severely damaged. The company may be fine.
Everyone is making the assumption here that what the CTO is doing is wrong. It may have been the right thing to do for the company. It is just the wrong thing for the OP.
I think the OP should lawyer up, try to get fairly compensated for his contributions, and end the relationship.
Business is unemotional. Those that invest their life into a business are emotional. Be true to yourself and it is ok to love what you do and enjoy who you work with and what you work on, but when it comes down to it, it is a job. Founders are no more special than any others. As soon as you start making significant progress from idea to product, ensure that you have clear written contracts setup.
There should really be a site for those beginning their company that provides sample contracts and talk about about the pros and cons of each approach for ensuring that when relationships end, things are handled in manner civil and with prior understanding of how things work. It could only be a good thing, because the incentive will be there to work more effectively in order to contribute in a way that will end in value immediately and/or later, regardless of the outcome. There are a lot of people that specialize in helping people in this regard, but I can't think of a site that is specifically for the purpose I'm speaking of.
> Everyone is making the assumption here that what the CTO is doing is wrong. It may have been the right thing to do for the company. It is just the wrong thing for the OP.
Barring the question of whether the OP is just lying about what's going on (so taking as given that the concerns raised are technical proficiency and that the CTO is asking the OP to leave the company and not just to lay off doing production coding work), I'm curious if you can explain under what circumstances this would be the right thing to do?
Undermining someone like this strikes me as probably almost never the right thing for the company. It's toxic and destroys trust in all directions.
It means the CTO is on a mission by the CEO, who was unable to speak directly with his cofounder.