Hashling NFT Investors Sue Founders for Misappropriating Funds

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• Hashling NFT investors have sued the project’s founder, claiming misuse of funds
• The investors allege that the founder secretly transferred funds from the project and another affiliated business
• The founder also pocketed funds from NFT drops held on Bitcoin and Solana blockchains

Hashling NFT investors have sued the project’s founder, Jonathan Mills, claiming he misappropriated and secretly moved funds from the project. The investors also claim that Mills siphoned over $3 million from another affiliated business specializing in Bitcoin mining. The investors said Mills hasn’t provided the profits he promised, which they claim constitutes fraud and a failure to act in the best interest of the investors, accusations that come three weeks after Nike was sued for allegedly operating a rug pull by shutting down its NFT platform RTFKT.

A Partner Gone Rogue?

Details about the case show that the investors and the NFT project’s founder were operating as business partners. Mills promised the investors “equity and returns on their investments of money, know-how, and work product.”

The investors claim that Mills used these assurances to obtain money, skills, and other things from them. They added that Mills stopped communicating and started evading the investors when the “money, know-how, and work product” generated more than a million dollars.”

To support his actions, Mills created a holding company called Satoshi Labs LLC, which he said holds the NFT project’s funds. He then drafted an error-ridden shareholder agreement that gave him 67% control and some investors 2% equity despite pumping $20,000 into the project.

No NFT Experience

The NFT project was mainly funded and executed by the investors because Mills had no NFT experience and the money to fund the project. He was, however, willing to help popularize the project. 

The investors want the court to impose an equitable remedy to prevent Mills from further unjustly enriching himself, They also want Mills to restore the benefits and equity as promised. The lawsuit comes three months after Metacard NFT project creators were sued for allegedly not fulfilling their promises to investors.

With Mills hiding behind a flawed shareholder agreement, it remains to be seen whether the court will look past the agreement to honor the investors’ wishes.