Jonathan Mills, the architect behind the Hashling NFT initiative and CEO of Satoshi Labs LLC, is facing legal action in Illinois. A lawsuit has been filed by a coalition of investors who claim that Mills misappropriated millions from collaborative cryptocurrency projects for personal benefit.
The lawsuit, initiated on May 14, accuses Mills of committing fraud, breaching his fiduciary duties, and unjustly enriching himself in connection with both an NFT initiative and a Bitcoin mining operation.
Documents filed with the court reveal that investors collectively contributed $1.46 million through two NFT drops on the Solana and Bitcoin blockchains, yet they report receiving none of the promised returns on their investments.
The plaintiffs allege that Mills maintained unilateral control over the company’s structure and finances, effectively sidelining partners despite initial agreements that outlined shared ownership and profit distribution.
Anatomy of the Dispute: Hashling NFT Launches, Mining, and Uneven Control
The Hashling NFT project was born out of discussions between Mills and one of the plaintiffs, Dustin Steerman. Despite acknowledging his lack of capital and experience in the NFT realm, Mills assumed a prominent leadership role.
Steerman, along with others who are now co-plaintiffs, provided various resources, including artwork, marketing, and representation at conferences, to support the project’s launch.
Founded on the success of NFT sales, the project soon diversified into Bitcoin mining. However, investors allege that Mills redirected at least $3 million from this mining venture into Satoshi Labs LLC, which he established and was previously known as Proof of Work Labs LLC.
A key issue in the lawsuit revolves around a shareholder agreement purportedly drawn up under Mills’ management, which granted him an unequal 67% equity and voting power. Meanwhile, some investors received as little as 2% equity—despite having individually contributed sums as high as $20,000.
The complaint characterizes the agreement as “rife with errors,” giving Mills de facto control over all significant business decisions.
According to the allegations, Mills reassured partners that their ownership stakes would remain intact after a company rebranding, yet he reportedly stopped communicating soon thereafter.
Furthermore, the plaintiffs assert that Mills involved his girlfriend as an investor in a misleading attempt to manipulate funds.
The lawsuit seeks not only restitution but also aims to establish a constructive trust over the disputed assets to curb any further diversion of funds.
Crypto Startups Under Legal Spotlight as NFT and Mining Risks Mount
The conflict surrounding Hashling is indicative of a growing trend of legal challenges facing nascent crypto enterprises, especially those that combine NFTs with decentralized financial models.
As the crypto landscape draws in more capital and inexperienced investors, legal frameworks are beginning to reform in response to a sector noted for its informal practices and insufficient investor protections.
Many crypto startups, particularly those amalgamating NFTs with decentralized funding mechanisms—such as token sales or decentralized autonomous organizations (DAOs)—are increasingly under scrutiny.
These hybrid models frequently operate without clearly defined legal parameters, leaning heavily on community consensus, informal agreements, and hype-driven fundraising efforts via social media.
A significant area of dispute often revolves around poorly defined or non-existent governance structures, which can leave founders relying on verbal contracts, handshake agreements, or unsigned digital annotations to manage equity split, token distribution, and treasury oversight.
Such informal arrangements frequently lack enforceability, leaving investors and collaborators stranded with little legal recourse in the event of project failures or founder disappearances.
These risks are not merely speculative. High-profile incidents, such as the Evolved Apes NFT rug pull, highlight the vulnerabilities investors face in unregulated digital asset markets.
In this instance, thousands of NFT purchasers were allegedly deceived with false assurances of a forthcoming video game. Additionally, in 2024, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Touzi Capital, claiming it defrauded over 1,200 investors by securing nearly $95 million under misleading pretenses.
The SEC has filed a lawsuit against Touzi Capital, accusing it of misrepresenting the liquidity of its crypto asset mining fund. #SEC #Bitcoin https://t.co/EfEih9JEJx
— Finance Newso.com (@Finance Newso) December 1, 2024
Reportedly, the firm claimed the raised funds were exclusively for crypto mining but allegedly diverted them towards unrelated enterprises.
The article titled “Hashling NFT Founder Accused of Stealing Millions from Investors and Bitcoin Mining Venture” originally appeared on Finance Newso.
