TLDR
- Jonathan Mills allegedly misappropriated millions from Hashling NFT and Bitcoin mining operations
- Investors claim they raised $1.46 million but received no returns
- Mills allegedly created a flawed shareholder agreement giving himself 67% equity
- Lawsuit filed May 14 in Illinois for fraud and breach of fiduciary duty
- Mills reportedly had little NFT experience before starting the project
Jonathan Mills, founder of Hashling NFT and CEO of Satoshi Labs LLC, has been sued by several investors who claim he stole millions of dollars from their joint ventures. The lawsuit, filed May 14 in Illinois, accuses Mills of fraud and breach of fiduciary duty after he allegedly failed to distribute promised equity returns.
According to court documents, the investors raised $1.46 million through two NFT drops on the Solana and Bitcoin blockchains. Despite this success, plaintiffs say they never saw any returns from their investment.
The investors claim Mills misappropriated profits from both the Hashling NFT project and a related Bitcoin mining operation. They allege he diverted at least $3 million from the Bitcoin mining project to Satoshi Labs LLC, formerly known as Proof of Work Labs LLC.
The Shareholder Agreement Controversy
One central issue in the case involves a shareholder agreement that plaintiffs describe as “rife with errors.” This agreement supposedly gave Mills a 67% equity share in the company while other investors received just 2% equity despite contributing up to $20,000 each.
Mills also allegedly held a 67% voting stake on all company matters. No other partner held more than 2% voting power, giving Mills effective control over all decisions.
The plaintiffs claim Mills assured them their equity stakes would remain unchanged when he changed the company name from Proof of Work Labs to Satoshi Labs. Shortly after these arrangements were made, Mills allegedly began “ghosting” his business partners.
Project Origins and Team Formation
The origins of the Hashling NFT project trace back to discussions between Mills and plaintiff Dustin Steerman, who had worked with Mills previously. Interestingly, Mills reportedly told 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,” said Clinton Ind, the investors’ attorney from Ind Legal Group LLC. “Even though that wasn’t the final idea, it did embolden it, and… everyone kind of enjoyed working together in those early stages.”
To build the project, Mills and Steerman recruited additional team members who are now plaintiffs in the case. These team members helped with NFT art creation, social media marketing, and even attended NFT conferences in New York to promote the project.
The lawsuit claims Mills even convinced his girlfriend to invest in the Hashling NFTs project, showing his apparent confidence in the venture despite allegedly planning to misappropriate funds.
In addition to fraud and breach of fiduciary duty claims, the plaintiffs have requested a constructive trust over the project’s assets and full legal restitution from Mills.
When contacted by Cointelegraph, Mills did not immediately respond to requests for comment about the allegations.
The case highlights the complex legal challenges that can arise in crypto ventures, particularly when formal agreements contain unusual equity distributions. The plaintiffs’ lawsuit seeks to recover their investments and establish proper control over the project assets.
The May 14 court filing marks the beginning of what could be a lengthy legal process to determine the validity of the shareholders’ claims against Mills and the rightful ownership of the project assets.
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