NFT Founder Accused of Embezzling Millions from Bitcoin Mining Project

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

Key Takeaways

• Jonathan Mills, founder of Hashling NFT, is accused of stealing millions from investors.

• Plaintiffs allege they raised $1.46 million but received no returns.

• Mills allegedly created a flawed shareholder agreement to maintain control over the project.

• Investors are seeking legal restitution and a constructive trust over the project’s assets.

Allegations of Fraud and Mismanagement

According to court documents filed in Illinois, the investors allege that Mills misappropriated funds and failed to pay promised equity returns. They claim to have raised a total of $1.46 million from two NFT drops on the Solana and Bitcoin blockchains, yet they have not seen any returns from their investments.

The lawsuit highlights that Mills allegedly ghosted the investors shortly after they contributed funds. He is accused 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 Shareholder Agreement Controversy

At the center of the dispute is a shareholder agreement that Mills purportedly created to justify his control over the project’s assets. The plaintiffs describe this agreement as “rife with errors” and designed to support Mills' claims of ownership.

• Equity Distribution: Mills allegedly secured a 67% equity share in the company, while other investors who contributed up to $20,000 each received only 2% equity.

• Voting Rights: Mills also held a 67% voting stake on all company matters, effectively sidelining other investors who had minimal voting power.

Despite assurances from Mills that their equity stakes would remain unchanged after the company’s name change from Proof of Work Labs to Satoshi Labs, the plaintiffs argue this was part of a scheme to maintain control over the assets.

Background of the Hashling NFT Project

The origins of the Hashling NFT project trace back to discussions between Mills and one of the plaintiffs, Dustin Steerman. Mills reportedly claimed to have no money or NFT-related experience before starting the project, yet he was able to recruit other investors to help with various aspects of the venture, including NFT art creation and marketing.

The plaintiffs allege that Mills even convinced his girlfriend to invest in the Hashling NFTs project, further complicating the situation.

Legal Actions and Investor Demands

In addition to 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 allow them to gain control over the assets while the case is resolved.

The case underscores the risks that investors face in the largely unregulated NFT space, where project founders can wield significant power over funds and operations. The plaintiffs are determined to hold Mills accountable for his actions and recover the money they believe was wrongfully taken from the project.

As the legal proceedings unfold, the outcome may set a precedent for future cases involving NFT projects and investor rights.

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.