NFT founder stole millions from Bitcoin project, investors allege
The leader of an NFT project and Bitcoin mining venture has been sued by his former business partners for allegedly failing to pay them their promised equity returns.
Several investors in a non-fungible token (NFT) project, Hashling NFT, have accused its founder of misappropriating millions of dollars in profits from the project and a closely tied Bitcoin mining operation.
According to the May 14 court filing in Illinois, the plaintiffs allege that their former business partner, Jonathan Mills, lied about transferring assets from Hashling NFT and at least $3 million from the Bitcoin mining project to a holding company — Satoshi Labs LLC (formerly known as Proof of Work Labs LLC), which Mills is the founder and CEO of.
The plaintiffs have sued Mills for fraud and breach of fiduciary duty, claiming that they have not received any of the equity returns that he supposedly promised.
They also claim to have raised a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains, but didn’t receive any returns from their investment.
Mills allegedly began ghosting them shortly afterward, according to the plaintiffs, adding that he created a flawed shareholder agreement to falsely support his claim that the holding company controlled the project’s assets.
This was “rife with errors” to support his lie, the plaintiffs said.
According to the supposedly flawed shareholder agreement, Mills was to receive a 67% equity share in Proof of Work Labs (before he later renamed it to Satoshi Labs) while several other investors contributed up to $20,000 into the company in exchange for just 2% equity.
He allegedly assured them that their equity stakes would remain unchanged despite the name change.
Mills also held a 67% voting stake on all matters related to Proof of Work Labs (at the time) while no other partner held more than 2%.
We reached out to Mills but didn’t receive an immediate response.
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Mills supposedly didn’t know much about NFTs
The Hashling NFT project was born from a different idea that Mills had initially discussed with one of the plaintiffs, Dustin Steerman, who initially established rapport with Mills from earlier collaborations.
They followed through with the Hashling NFT project despite Mills initially telling Steerman that he had no money and no NFT-related experience to contribute to the project.
“[Mills] had a willingness to help push the project forward, and he did have an idea at the start,” the investor’s attorney, Clinton Ind of Ind Legal Group LLC told Law360.
“Even though that wasn’t the final idea, it did embolden it, and … everyone kind of enjoyed working together in those early stages.”
To ensure the Hashling NFT project’s success, Mills and Steerman recruited other investors, now also plaintiffs, to assist with everything from the NFT art and social media marketing to even attending NFT conferences in New York.
Mills even got his girlfriend to invest in the Hashling NFTs project, the plaintiffs claimed.
In addition to the fraud and breach of fiduciary actions, the plaintiffs also requested a constructive trust over the project’s assets and full legal restitution.
