Investors Sue Hashling NFT Founder Over Alleged $3M Misappropriation

Several investors in the Hashling NFT project have taken legal action against its founder, Jonathan Mills, accusing him of misappropriating millions of dollars in profits from the project and a related Bitcoin mining operation. The plaintiffs allege that 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, of which Mills is the founder and CEO. The investors claim that they have not received any of the equity returns that Mills supposedly promised, despite raising a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains.

According to the plaintiffs, Mills began to avoid communication with them shortly after the alleged misappropriation. He created a flawed shareholder agreement to falsely support his claim that the holding company controlled the project's assets. The agreement was reportedly filled with errors to support his lie. It stated that Mills was to receive a 67% equity share in Proof of Work Labs (before it was renamed to Satoshi Labs) while several other investors contributed up to $20,000 into the company in exchange for just 2% equity. Mills 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%.

The Hashling NFT project originated from an idea that Mills initially discussed with one of the plaintiffs, Dustin Steerman, who had previously collaborated with Mills. Despite Mills initially stating that he had no money and no NFT-related experience to contribute to the project, they proceeded with the Hashling NFT project. To ensure the project’s success, Mills and Steerman recruited other investors to assist with various aspects of the project, including NFT art, social media marketing, and attending NFT conferences. Mills even encouraged his girlfriend to invest in the Hashling NFTs project, according to the plaintiffs.

The plaintiffs have sued Mills for fraud and breach of fiduciary duty. In addition to these actions, the plaintiffs have requested a constructive trust over the project’s assets and full legal restitution. The plaintiffs' attorney stated that Mills had a willingness to help push the project forward and that everyone enjoyed working together in the early stages. However, the allegations of misappropriation and fraud have led to a legal battle that could have significant implications for the future of the Hashling NFT project and the Bitcoin mining operation.

This case highlights the risks and complexities involved in the rapidly evolving world of NFTs and cryptocurrency. The allegations against Mills underscore the importance of transparency and accountability in these projects, as well as the need for robust legal frameworks to protect investors. The outcome of this legal battle will be closely watched by industry participants and could set important precedents for future disputes in the NFT and cryptocurrency space.