Grundy was secretary of the Manchester Chess Club (England). In that capacity, he held and then failed to pay Blackburne's stake in his 1877 match against Zukertort. The match was suspended and then abandoned after Game 2, and Grundy quickly left for the United States. (1)
There Grundy's greatest achievement in chess was also his last. He tied for first in the 5th American Chess Congress (1880)
"A meeting of the Chess Association of the United States was held last evening at No. 60 East Fourteenth-street, to receive the report of the committee appointed to investigate charges of collusion against Messrs. Grundy and Ware, two of the contestants in the late chess tournament held in this City...Mr Grundy...denied the allegations made by Ware, and he said there was a conspiracy against him, in which one of the prominent members of the congress committee was implicated. The committee reported that..it believed the charges to be true..." (2) "New York Times", 8th March 1880, p.3.
The tournament book states he "was given the benefit of a technical doubt, and a verdict of 'not proven' was entered..." due to the conflicting testimony from the two parties, but Grundy's reputation was effectively ruined. (3)
Before the scandal fully broke, Grundy was invited to the Toronto Chess Club for a simultaneous display and several individual games. The Toronto club was criticized for inviting a compromised man.
(1) "Joseph Henry Blackburne: A Chess Biography", T. D. Harding; p.130.
(2) "New York Times", 8th March 1880, p.3.
(3) "The Fifth American Congress", ed Charles A. Gilberg (1881), p.150-151.