Mawson Terminates CEO Amid Fraud Allegations, Files Lawsuit

Mawson Infrastructure, a leading Bitcoin mining and colocation provider, has terminated its CEO and President, Rahul Mewawalla, due to allegations of fraud and breaches of fiduciary duties. The board of directors officially announced the termination on July 8, revoking Mewawalla's board seat and filing a lawsuit in Delaware’s Court of Chancery to seek damages. This decision comes just months after Mawson had rewarded Mewawalla with substantial compensation, including $2.5 million in cash bonuses, 1.2 million restricted stock units, and a base salary increase to $1.2 million, in recognition of his "high-performing" executive performance.

The board had initiated an investigation into the allegations on May 30, placing Mewawalla on administrative leave and appointing General Counsel Kaliste Saloom as interim CEO. Mewawalla has not publicly responded to the accusations but has expressed his disagreement with the company's characterization of events in a July 17 letter to the board. In his letter, he referenced the board's previous public praise of his leadership and highlighted several strategic, operational, and financial achievements during his tenure, including significant revenue growth and reductions in expenses.

The termination of Mewawalla and the subsequent legal actions underscore the complexities and challenges faced by companies in the rapidly evolving cryptocurrency industry. The allegations of fraud and misconduct emphasize the critical importance of corporate governance, transparency, and accountability in executive leadership. The ongoing legal disputes also raise questions about the operational and financial integrity of Mawson and its ability to effectively navigate these challenges.

This dispute arises amidst other legal issues for Mawson, including a lawsuit filed by Stone Ridge and its mining subsidiary, Consensus Colocation. The lawsuit alleges that Mawson took control of more than 20,000 ASIC miners worth $30 million owned by NYDIG and hosted at Mawson’s Midland, Pennsylvania, facility. Earlier this year, Canaan had signed a three-year colocation deal with Mawson for the same facility, involving approximately 64 megawatts of capacity to host 17,453 units of Canaan’s latest-generation machines, contributing to the expansion of Canaan’s proprietary hashrate in North America.