Jonathan Mills, founder of the Hashling NFT project and CEO of Satoshi Labs LLC, is facing a civil lawsuit in Illinois from a group of investors who allege he diverted millions from joint crypto ventures for personal gain.
The suit, filed on May 14, accuses Mills of fraud, breach of fiduciary duty, and unjust enrichment related to an NFT initiative and a Bitcoin mining operation.
According to court documents, investors contributed $1.46 million through two NFT drops on the Solana and Bitcoin blockchains, only to receive none of the promised equity returns.
The plaintiffs claim Mills unilaterally controlled the company’s structure and finances, ultimately cutting out partners despite earlier agreements to share ownership and profits.
Anatomy of the Dispute: Hashling NFT Launches, Mining, and Uneven Control
The Hashling NFT project originated from discussions between Mills and one of the plaintiffs, Dustin Steerman. Despite admitting to having no capital or experience in NFTs, Mills took a leading role in the project.
Steerman and others, now co-plaintiffs, contributed resources ranging from artwork and marketing to conference representation to support the launch.
The project was funded through successful NFT sales and soon expanded to include a Bitcoin mining arm.
However, the investors allege that Mills funneled at least $3 million from the mining operation into his company, which he founded, Satoshi Labs LLC, previously known as Proof of Work Labs LLC.
A central point of contention is a shareholder agreement allegedly drafted under Mills’ supervision, which allocated him a disproportionate 67% equity and voting control.
By contrast, other investors received as little as 2% equity, even those who had contributed up to $20,000 individually.
The complaint described the agreement as “rife with errors,” leaving Mills with de facto authority over all business decisions.
Mills reportedly assured partners their stakes would remain unchanged when the company rebranded, but shortly after, he allegedly ceased communication altogether.
The plaintiffs also claim Mills involved his girlfriend in the project as an investor, a move they cite as misleading given his alleged intent to misuse funds.
In addition to restitution, the lawsuit seeks to establish a constructive trust over the disputed assets to prevent further funds diversion.
Crypto Startups Under Legal Spotlight as NFT and Mining Risks Mount
The Hashling dispute shows a rising wave of legal challenges facing early-stage crypto ventures, particularly those that merge NFTs with decentralized financing structures.
As the crypto ecosystem continues to attract new capital and inexperienced investors, legal systems are catching up with the sector’s lack of formality and investor protections.
Crypto startups, especially those blending NFTs with decentralized funding models such as token sales or DAOs, are increasingly under legal fire.
These hybrid ventures often operate without clear legal status, relying instead on community consensus, informal agreements, and social media-driven hype to raise funds.
In many cases, a significant point of contention is the vague or non-existent governance structures underpinning these ventures.
Founders may rely on verbal assurances, handshake deals, or unsigned digital documents when splitting equity, allocating tokens, or managing treasury funds.
These informal arrangements are rarely enforceable and can leave investors and collaborators without legal recourse when projects fail or founders disappear.
The risks aren’t theoretical. Several high-profile cases, including the Evolved Apes NFT rug pull, shed light on just how vulnerable investors are in unregulated digital asset markets.
In the Evolved Apes case, thousands of NFT buyers were defrauded with false promises of a future video game.
In 2024, the U.S. SEC sued investment firm Touzi Capital for allegedly defrauding over 1,200 investors by raising nearly $95 million under false pretenses.
The firm claimed the funds were solely for crypto mining but allegedly diverted them to unrelated ventures.
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