According to Cointelegraph, several investors involved in the Hashling NFT project have accused its founder, Jonathan Mills, of misappropriating millions of dollars in profits from the project and a related Bitcoin mining operation. A court filing in Illinois on May 14 reveals that the plaintiffs allege Mills deceived them 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, where Mills serves as founder and CEO. The investors have filed a lawsuit against Mills for fraud and breach of fiduciary duty, claiming they have not received any of the equity returns he allegedly promised.
The plaintiffs assert they raised a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains but did not receive any returns on their investment. They further allege that Mills began avoiding them shortly after the investments, creating a flawed shareholder agreement to falsely support his claim that the holding company controlled the project's assets. This agreement, according to the plaintiffs, was riddled with errors to support Mills' deception. The agreement purportedly granted Mills a 67% equity share in Proof of Work Labs, while other investors contributed up to $20,000 each for just a 2% equity stake. Mills allegedly assured them that their equity stakes would remain unchanged despite the company's name change. Additionally, Mills held a 67% voting stake on all matters related to Proof of Work Labs, with no other partner holding more than 2%.
The Hashling NFT project originated from a different idea Mills discussed with one of the plaintiffs, Dustin Steerman, who had previously collaborated with Mills. Despite Mills initially admitting to Steerman that he lacked both funds and NFT-related experience, they proceeded with the project. The investor's attorney, Clinton Ind of Ind Legal Group LLC, mentioned that Mills had a willingness to push the project forward, which encouraged the team to work together in the early stages. To ensure the project's success, Mills and Steerman recruited additional investors, now plaintiffs, to assist with various aspects, including NFT art, social media marketing, and attending NFT conferences in New York. The plaintiffs also claimed that Mills involved his girlfriend in the Hashling NFTs project.
In addition to the fraud and breach of fiduciary duty claims, the plaintiffs have requested a constructive trust over the project's assets and full legal restitution. Cointelegraph reached out to Mills for comment but did not receive an immediate response.
