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NFT Founder Faces Allegations of Embezzling Millions from Bitcoin Venture

May 18

2 min read

Several investors in the Hashling NFT project have accused its founder, Jonathan Mills, of misappropriating millions of dollars from both the NFT initiative and a related Bitcoin mining operation. The allegations, detailed in a recent court filing, suggest a pattern of deceit and financial misconduct.

Key Takeaways

  • Jonathan Mills, founder of Hashling NFT, is accused of stealing over $3 million from investors.

  • Plaintiffs allege Mills misrepresented asset transfers and created a flawed shareholder agreement.

  • The lawsuit includes claims of fraud and breach of fiduciary duty.

Allegations of Fraud and Mismanagement

In a court filing submitted on May 14 in Illinois, investors claim that Mills lied about transferring assets from Hashling NFT and a Bitcoin mining project to a holding company he controls, Satoshi Labs LLC. The plaintiffs assert that they have not received any returns on their investments, which totaled approximately $1.46 million raised from two NFT drops on the Solana and Bitcoin blockchains.

The lawsuit accuses Mills of:

  • Fraud: Misleading investors about the financial health and asset management of the project.

  • Breach of Fiduciary Duty: Failing to act in the best interests of the investors.

The Flawed Shareholder Agreement

According to the plaintiffs, Mills created a shareholder agreement that was riddled with errors, designed to falsely support his claims regarding the control of project assets. Key points of contention include:

  • Mills allegedly held a 67% equity share in Satoshi Labs, while other investors received only 2% equity for contributions of up to $20,000.

  • The agreement purportedly allowed Mills to maintain a 67% voting stake on all company matters, effectively sidelining other investors.

The Rise and Fall of Hashling NFT

The Hashling NFT project originated from an initial idea discussed between Mills and one of the plaintiffs, Dustin Steerman. Despite Mills's initial claims of having no financial resources or NFT experience, he was brought on board to help push the project forward. The collaboration initially thrived, with Mills and Steerman recruiting additional investors to assist with various aspects of the project, including:

  • NFT art creation

  • Social media marketing

  • Attendance at NFT conferences

However, as the project progressed, Mills reportedly began to distance himself from the investors, leading to the current legal disputes.

Legal Actions and Demands

In addition to seeking damages for fraud and breach of fiduciary duty, the plaintiffs are requesting a constructive trust over the project’s assets and full legal restitution. This legal action highlights the growing concerns surrounding transparency and accountability in the rapidly evolving world of NFTs and cryptocurrency.

As the case unfolds, it serves as a cautionary tale for investors in the digital asset space, emphasizing the importance of due diligence and the potential risks associated with emerging technologies.

Sources

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

May 18

2 min read

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