Personally, I would have asked WHY he didn't know this, because the events that led up to the current situation are almost certainly bigger than the fact itself

Personally, I would have asked WHY he didn't know this, because the events that led up to the current situation are almost certainly bigger than the fact itself. And then: fire or not fire the guy - at a small startup you have no time to rehabilitate people. It's just too expensive. (Personally, I am not a big fan of threats. This isn't something that has come up at work much, though.)