In a recent revelation, several investors of the non-fungible token (NFT) venture, Hashling NFT, have implicated its founder, Jonathan Mills, in the misappropriation of millions of dollars. These funds allegedly originated from the NFT project and an associated Bitcoin mining operation.
As per a court filing on May 14 in Illinois, the complainants argue that Mills, their former business associate, deceived them about transferring assets from Hashling NFT and at least $3 million from the Bitcoin mining venture to a parent company – Satoshi Labs LLC. This company, initially known as Proof of Work Labs LLC, is where Mills holds the position of founder and CEO.
Accusing Mills of fraud and violation of fiduciary duty, the complainants assert they haven’t received any returns on equity that Mills allegedly guaranteed. They also report raising a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains, but saw no returns on their investment.
The complainants allege that Mills soon after stopped communicating with them and crafted a faulty shareholder agreement to falsely prop up his claim of the parent company controlling the project’s assets. This agreement, according to the plaintiffs, was “full of discrepancies” to back his untruth.
Per the disputed shareholder agreement, Mills was slated to have a 67% equity stake in Proof of Work Labs (later renamed to Satoshi Labs), while several other investors put in up to $20,000 into the company for a mere 2% equity. Despite the name change, Mills allegedly promised them that their equity shares would stay the same.
While Mills held a 67% voting stake on all matters related to Proof of Work Labs (at the time), no other partner had more than a 2% stake. An attempt to reach out to Mills for a comment was unsuccessful.
Mills, who allegedly lacked extensive knowledge about NFTs, initially discussed a different idea for the Hashling NFT project with one of the plaintiffs, Dustin Steerman, who had previously collaborated with him. Despite Mills claiming to have no money or NFT-related experience to contribute, the project moved forward.
According to the investor’s attorney, Clinton Ind of 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.”
For the successful launch of the Hashling NFT project, Mills and Steerman recruited other investors, now co-plaintiffs, who handled everything from NFT art and social media marketing to attending NFT conferences in New York. Mills even convinced his girlfriend to invest in the Hashling NFT project, the plaintiffs allege.
Besides the accusations of fraud and breach of fiduciary actions, the plaintiffs also sought a constructive trust over the project’s assets and full legal restitution.
