Investors in the Hashling NFT project say they have lost millions after accusing founder Jonathan Mills of moving assets and at least three million dollars in profits into his firm, Satoshi Labs LLC.
The May 14 court filing in Illinois claims Mills transferred funds meant for NFT backers and a related Bitcoin mining venture without consent. Plaintiffs allege fraud, breach of trust and say they never saw the returns they were promised.
Allegations of Misappropriation
According to the lawsuit, Mills quietly shifted money raised through two NFT drops, totalling about $1.46 million, into a holding company he controls.
That firm began life as Proof of Work Labs LLC but now goes by Satoshi Labs. Plaintiffs say their share of equity vanished when Mills rewrote ownership rules to put himself in control.
Claims of Flawed Agreements
Investors point to a shareholder agreement they call “rife with errors.” In that document, Mills awarded himself 67% equity in Proof of Work Labs while limiting all other contributors to just 2% each.
He assured them that a later name change would not affect their ownership. Yet the suit argues the rewritten agreement erased their stakes and gave Mills full voting power.
Early Collaboration and Trust
The dispute traces back to initial talks between Mills and investor Dustin Steerman. Steerman says Mills offered fresh ideas and energy that helped launch the Hashling concept.
They brought in a team to work on art, marketing and conference appearances. Even Mills’s girlfriend joined as an investor, according to court papers. Early on, the group enjoyed a sense of teamwork.
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Silence and Legal Action
Shortly after the NFT drops, backers say Mills stopped responding to calls and messages. They claim he went silent as the project generated revenue from sales on both the Solana and Bitcoin blockchains.
That silence pushed the group to seek legal help. Now they are pressing fraud and fiduciary breach charges in Illinois state court.
Context of NFT Market Trends
Last year saw NFT trading volumes fall by 19% compared with 2023. Sales counts also dropped by 18%, marking one of the weakest years since 2020.
Still, the sector showed signs of life early this year with a trading volume of $5.3 billion in the first quarter, up 4% from the same period in 2023. Investors say these highs fueled their hopes for solid returns.
Impact on Bitcoin Mining Venture
The Hashling story is tied closely to a small Bitcoin mining operation. Plaintiffs say profits from that effort also ended up in Satoshi Labs.
They claim Mills treated the mining revenue as his funds, despite promises to share gains. That allegation adds a layer of complexity, as Bitcoin mining carries its risks and rewards.
Regulatory and Industry Implications
This case highlights the challenges of emerging digital asset projects. Lack of clear rules and uneven paperwork can leave investors exposed.
Legal experts warn that founders must keep transparent records and honour agreements if they hope to attract long-term support. As regulators debate oversight of cryptocurrencies, disputes like this one underscore the need for tighter controls.
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