The founder of the Hashling NFT project and a closely tied Bitcoin mining venture is facing legal action from former business partners who accuse him of defrauding investors out of millions in profits. According to a May 14 court filing in Illinois, plaintiffs allege that Jonathan Mills, the founder of Satoshi Labs LLC (formerly known as Proof of Work Labs LLC), misappropriated funds and failed to deliver promised equity return, hence, the Hashling NFT fraud.
Allegations of Misappropriation and Breach of Trust
Several investors involved in the Hashling NFT project claim that Mills transferred assets from the project and at least $3 million from the Bitcoin mining operation to his holding company, Satoshi Labs LLC, without compensating them. The plaintiffs have filed a lawsuit against Mills for fraud and breach of fiduciary duty, asserting that they have not received any of the equity returns he allegedly promised.
“He created a flawed shareholder agreement to falsely support his claim that the holding company controlled the project’s assets,” the plaintiffs stated, adding that the document was “rife with errors” to bolster his alleged misrepresentation.
The plaintiffs also claim that two NFT drops on the Solana and Bitcoin blockchains raised a combined $1.46 million , yet they saw no returns on their investments. According to the lawsuit, Mills began ignoring their communications shortly after the funds were raised, leaving them in the dark about the project’s financial status.
Unequal Equity Distribution Sparks Controversy
The plaintiffs allege that Mills structured the equity distribution unfairly, granting himself a 67% stake in Proof of Work Labs (later renamed Satoshi Labs) while other investors contributed up to $20,000 for just 2% equity. Despite assurances that their equity stakes would remain unchanged after the name change, the plaintiffs argue that Mills retained overwhelming control over the company’s decisions.
Mills reportedly held a 67% voting stake on all matters related to the company, leaving no other partner with more than 2% influence. This disproportionate control, coupled with his alleged failure to distribute profits, has fueled accusations of misconduct.
The Origins of the Hashling NFT Project
The Hashling NFT project originated from an idea discussed between Mills and one of the plaintiffs, Dustin Steerman, who had previously collaborated with Mills on other ventures. Despite Mills admitting early on that he lacked both NFT-related experience and financial resources, Steerman and other investors decided to proceed, believing in Mills’ willingness to help push the project forward.
“[Mills] had a willingness to help push the project forward, and he did have an idea at the start,” said Clinton Ind , the plaintiffs’ attorney, in an interview with Law360.
To ensure the project’s success, Mills and Steerman recruited additional investors to assist with various aspects, including NFT art creation, social media marketing, and attending conferences in New York. The plaintiffs even claim that Mills convinced his girlfriend to invest in the project, further highlighting their trust in his leadership.
Legal Requests and Potential Outcomes
In addition to seeking damages for Hashling NFT fraud and breach of fiduciary duty, the plaintiffs are requesting a constructive trust over the project’s assets and full legal restitution. They aim to recover their investments and hold Mills accountable for his alleged actions.
