Investors Accuse NFT Founder of Embezzling Millions from Bitcoin Project

Several investors in the Hashling NFT project have filed a lawsuit against its founder, Jonathan Mills, alleging that he misappropriated millions of dollars from both the NFT venture and a related Bitcoin mining operation. The lawsuit, filed in Illinois, claims that Mills failed to deliver promised returns and misled investors about the project's financial status.

Key Takeaways

• Investors allege Jonathan Mills misappropriated funds from the Hashling NFT project and a Bitcoin mining operation.

• The lawsuit claims Mills created a flawed shareholder agreement to maintain control over the project.

• Plaintiffs are seeking restitution and a constructive trust over the project's assets.

Allegations of Fraud and Mismanagement

According to court documents, the plaintiffs raised approximately $1.46 million from two NFT drops on the Solana and Bitcoin blockchains. Despite the successful fundraising, investors claim they have not received any returns on their investments. Mills allegedly began to ghost the investors shortly after the funds were raised.

The lawsuit accuses Mills of lying about transferring assets from Hashling NFT and at least $3 million from the Bitcoin mining project to a holding company named Satoshi Labs LLC, which he founded and leads. The plaintiffs argue that Mills created a flawed shareholder agreement that unjustly granted him 67% equity and voting rights, while other investors received only 2% equity for their contributions of up to $20,000.

The Shareholder Agreement Controversy

The flawed shareholder agreement is at the center of the dispute. Key points include:

• Equity Distribution: Mills received 67% equity, while other investors received only 2%.

• Voting Rights: Mills held 67% voting power, allowing him to control all company decisions.

• Assurances: Mills allegedly assured investors that their equity stakes would remain unchanged despite the company's name change from Proof of Work Labs to Satoshi Labs.

Background of the Hashling NFT Project

The Hashling NFT project originated from discussions between Mills and one of the plaintiffs, Dustin Steerman. Mills reportedly claimed to have no money or experience in NFTs when the project began. Despite this, he was able to recruit other investors to help with various aspects of the project, including:

• NFT Art Creation

• Social Media Marketing

• Attendance at NFT Conferences

Mills even convinced his girlfriend to invest in the project, further complicating the allegations of mismanagement and deceit.

Legal Actions and Investor Demands

The plaintiffs are not only seeking damages for fraud and breach of fiduciary duty but are also requesting a constructive trust over the project's assets. This legal remedy would allow them to gain control over the assets while the case is resolved, ensuring that the funds are protected from further misappropriation.

The case highlights the significant risks investors face in the largely unregulated NFT space, where founders can exert considerable control over funds and operations without adequate oversight. As the legal proceedings unfold, investors hope to hold Mills accountable for his alleged actions and recover the money they believe was wrongfully taken from the project.

Sources

• Investors File Lawsuit Against NFT Founder for $3 Million Bitcoin Mining Fraud, CoinCentral.

• NFT founder stole millions from Bitcoin project, investors allege, Cointelegraph.

• NFT Team Says Founder Stole Millions From Bitcoin Project, Law360.