TLDR
- Investors filed lawsuit against Jonathan Mills on May 14 in Illinois court
- Plaintiffs claim Mills diverted at least $3 million from Bitcoin mining operations
- Investors say they raised $1.46 million from NFT drops but received zero returns
- Mills allegedly structured shareholder agreement giving himself 67% equity and voting power
- Plaintiffs seek constructive trust over assets and full legal restitution
A group of disgruntled investors has taken legal action against Jonathan Mills, the founder of Hashling NFT and CEO of Satoshi Labs LLC, alleging he misappropriated millions in funds from their joint cryptocurrency ventures. The lawsuit, filed in an Illinois court on May 14, paints a picture of broken trust and financial deception.
Court documents state that investors collectively raised $1.46 million through NFT drops on two different blockchains – Solana and Bitcoin. Despite this successful fundraising, the plaintiffs claim they have yet to see a penny in returns.
The heart of the lawsuit centers on allegations that Mills diverted profits from both the Hashling NFT project and an associated Bitcoin mining operation. The plaintiffs assert Mills transferred at least $3 million from the Bitcoin mining project to his company, Satoshi Labs LLC (formerly operating under the name Proof of Work Labs LLC).
The legal complaint includes charges of fraud and breach of fiduciary duty. Investors claim Mills made promises regarding equity returns that were never fulfilled.
The Corporate Structure Questions
According to the plaintiffs, Mills created a problematic shareholder agreement that they describe as “rife with errors.” This agreement allegedly served to falsely establish his claim that his holding company controlled all project assets.
The contentious shareholder agreement reportedly granted Mills a 67% equity stake in the company. In stark contrast, other investors who contributed up to $20,000 each received only 2% equity shares.
Mills also secured a 67% voting stake on all company matters through this agreement. This structure effectively gave him complete control, as no other partner held more than a 2% voting interest.
The plaintiffs allege that after establishing this lopsided arrangement, Mills began avoiding communication with them. They claim he assured them their equity positions would remain intact even after he changed the company name from Proof of Work Labs to Satoshi Labs.
Project Background
The Hashling NFT project reportedly began as a different concept initially discussed between Mills and plaintiff Dustin Steerman, who had previously collaborated with Mills on other ventures. What makes this case particularly interesting is that Mills allegedly admitted to Steerman that he lacked both funding and experience in NFTs before starting the project.
“[Mills] had a willingness to help push the project forward, and he did have an idea at the start,” explained Clinton Ind, attorney for the investors. “Even though that wasn’t the final idea, it did embolden it, and… everyone kind of enjoyed working together in those early stages.”
To develop the Hashling project, Mills and Steerman brought on additional team members who now serve as plaintiffs in the case. These individuals contributed expertise in creating NFT artwork, managing social media marketing, and representing the project at NFT conferences in New York.
The lawsuit even claims Mills convinced his girlfriend to invest in the Hashling NFT project. This detail suggests he displayed confidence in the venture despite allegedly planning to divert funds for personal gain.
Beyond the fraud and fiduciary duty claims, the plaintiffs have requested the court establish a constructive trust over all project assets. They also seek full legal restitution for their losses.
