Hashling NFT Investors Sue Founder Over Alleged $3M Misappropriation

Investors in the Hashling NFT project have initiated legal action against the project's founder, Jonathan Mills, alleging that he misappropriated millions of dollars and failed to deliver on promised equity returns. The lawsuit, filed on May 14 in Illinois, accuses Mills of diverting profits from both the NFT project and a related Bitcoin mining operation.

According to the court documents, Mills is accused of falsely claiming that he transferred assets from Hashling NFT and at least $3 million from a Bitcoin mining project to Satoshi Labs LLC, a company where he serves as the founder and CEO. The plaintiffs, who raised a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains, assert that they have not received any returns on their investments.

Following the NFT drops, the plaintiffs allege that Mills began to avoid communication with them. They claim that Mills created a flawed shareholder agreement to support his assertion that his holding company controlled the project’s assets. The disputed shareholder agreement allegedly granted Mills a 67% equity share in Proof of Work Labs, while several investors who contributed up to $20,000 received just 2% equity each. Mills also held a 67% voting stake on all company matters, with no other partner holding more than 2%.

The plaintiffs claim that Mills assured them their equity stakes would remain unchanged when he later renamed the company to Satoshi Labs. When contacted, Mills did not provide an immediate response to these allegations.

The Hashling NFT project began as a different concept initially discussed between Mills and plaintiff Dustin Steerman. The two had established a rapport from previous collaborations. Interestingly, Mills reportedly told Steerman at the outset that he had neither money nor NFT-related experience to contribute to the project. Despite these limitations, they proceeded with the Hashling NFT venture.

To help ensure the project’s success, Mills and Steerman brought in additional investors who are now also plaintiffs in the case. These team members assisted with various aspects of the project, from NFT art creation and social media marketing to attending NFT conferences. The lawsuit seeks multiple remedies, including claims for fraud and breach of fiduciary duty. The plaintiffs have also requested a constructive trust over the project’s assets and full legal restitution.

The case highlights the risks investors face in the largely unregulated NFT space, where project governance and financial transparency often rely heavily on trust between founding partners. The plaintiffs continue to pursue legal action as they seek to recover their investments and promised returns from the allegedly mismanaged project. The claimed misappropriation included both NFT sales proceeds and profits from the related Bitcoin mining operation that was closely tied to the Hashling project.