Hashling NFT Project Investors Sue Founder Jonathan Mills, Accusing Him of Stealing Millions

Investors in the Hashling NFT project have filed a lawsuit against founder Jonathan Mills, accusing him of stealing millions of dollars from both the NFT venture and a related Bitcoin mining operation.

Investors in the Hashling NFT project have filed a lawsuit against founder Jonathan Mills, alleging he stole millions of dollars from both the NFT venture and a related Bitcoin mining operation.

According to a complaint filed on May 14 in Illinois and seen by Blockworks, the plaintiffs claim Mills also misappropriated funds and failed to pay promised equity returns.

The legal action comes after investors say they were ghosted by Mills following their investments.

According to the lawsuit, investors raised a combined $1.46 million from two NFT drops on the Solana and Bitcoin blockchains. Despite the success of these drops, the plaintiffs say they never received any returns on their investments.

At the heart of the dispute lies Satoshi Labs LLC, formerly known as Proof of Work Labs LLC. Mills, who serves as founder and CEO of the company, allegedly told investors he had transferred assets from Hashling NFT and at least $3 million from the Bitcoin mining project to this holding company.

The Shareholder Agreement Controversy

The plaintiffs claim Mills created a flawed shareholder agreement to try and justify his control over the project’s assets. This agreement was allegedly “rife with errors” designed to support Mills’ claims.

Under the agreement, Mills received a 67% equity share in the company. Other investors who contributed up to $20,000 each received just 2% equity in return.

Mills also secured a 67% voting share on all matters related to the company. This gave him an overwhelming majority, as no other partner held more than 2% voting rights.

When the company name changed from Proof of Work Labs to Satoshi Labs, Mills reportedly assured investors their equity shares would remain unchanged. However, the plaintiffs claim this was part of a scheme to maintain control over the assets.

The origins of the Hashling NFT project can be traced back to discussions between Mills and plaintiff Dustin Steerman, who had previously worked with Mills at another company.

What’s strange about this partnership is that Mills reportedly told Steerman he had “no money and no NFT-related experience” before starting the project with Steerman.

“[Mills] had a willingness to help push the project forward, and he did have an idea at the start,” said Clinton Ind, the investors’ attorney from Ind Legal Group LLC.

To make the project a success, Mills and Steerman brought in other investors who now serve as plaintiffs in the case. These team members helped with NFT art creation, social media marketing, and even attended NFT conferences in New York to promote the project.

The lawsuit even claims Mills convinced his girlfriend to invest in the Hashling NFTs.

Beyond the fraud and breach of fiduciary duty claims, the plaintiffs are seeking a constructive trust over the project’s assets and full legal restitution. This would give them control over the assets while the case is being settled.

Cointelegraph reached out to Jonathan Mills for comment but did not receive an immediate response at the time of publication.

The case highlights the risks investors face in the largely unregulated NFT space, where project founders can exert considerable power over the project’s funds and operations.

Court documents show the plaintiffs are asking the court to hold Jonathan Mills accountable for his actions and to return the funds that were allegedly taken from the project.