TLDR
- Hashling NFT founder Jonathan Mills sued for allegedly misappropriating millions from the project and related Bitcoin mining operation
- Investors claim they raised $1.46 million from NFT drops but received no returns
- Mills allegedly created a flawed shareholder agreement giving himself 67% equity and voting rights
- Plaintiffs are suing for fraud and breach of fiduciary duty
- Mills reportedly admitted having no money or NFT experience before starting the project
Investors in the Hashling NFT project have filed a lawsuit against founder Jonathan Mills, accusing him of stealing millions of dollars from both the NFT venture and a related Bitcoin mining operation.
According to court documents filed on May 14 in Illinois, the plaintiffs allege that Mills misappropriated funds and failed to pay promised equity returns. The legal action comes after investors claim they were ghosted by Mills following their investments.
The lawsuit states that investors raised a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains. Despite the success of these drops, the plaintiffs say they never received any returns from their investments.
At the heart of the dispute is Satoshi Labs LLC, formerly known as Proof of Work Labs LLC. Mills, who serves as founder and CEO of the company, allegedly told investors he had transferred assets from Hashling NFT and at least $3 million from the Bitcoin mining project to this holding company.
The Shareholder Agreement Controversy
The plaintiffs claim Mills created a flawed shareholder agreement to justify his control over the project’s assets. This agreement was allegedly “rife with errors” designed to support his claims.
Under this agreement, Mills received a 67% equity share in the company. Other investors who contributed up to $20,000 each received just 2% equity in return.
Mills also secured a 67% voting stake on all matters related to the company. This gave him overwhelming control, as no other partner held more than 2% voting rights.
When the company name changed from Proof of Work Labs to Satoshi Labs, Mills assured investors their equity stakes would remain unchanged. However, the plaintiffs claim this was part of a scheme to maintain control over the assets.
The origins of the Hashling NFT project trace back to discussions between Mills and plaintiff Dustin Steerman, who had worked with Mills previously. What’s strange about this partnership is that Mills reportedly told Steerman he had “no money and no NFT-related experience” before starting the project.
“[Mills] had a willingness to help push the project forward, and he did have an idea at the start,” said Clinton Ind, the investors’ attorney from Ind Legal Group LLC.
To make the project successful, Mills and Steerman brought in other investors who now serve as plaintiffs in the case. These team members helped with NFT art creation, social media marketing, and even attended NFT conferences in New York to promote the project.
The lawsuit even claims Mills convinced his girlfriend to invest in the Hashling NFTs project.
Beyond the fraud and breach of fiduciary duty claims, the plaintiffs are seeking a constructive trust over the project’s assets and full legal restitution. This would give them control over the assets while the case is resolved.
Cointelegraph reported that they reached out to Mills for comment but did not receive an immediate response at the time of reporting.
The case highlights the risks investors face in the largely unregulated NFT space, where project founders can wield considerable power over funds and operations.
Court documents show the plaintiffs are asking the court to hold Mills accountable for his actions and to recover the money they believe was wrongfully taken from the project.
