Lawsuit Alleges Fraud, Breach of Duty, and Misappropriation of Funds by Satoshi Labs CEO
Jonathan Mills, founder and CEO of Satoshi Labs LLC (formerly Proof of Work Labs LLC), has been sued by former business partners over allegations that he stole millions in profits from the Hashling NFT project and a related Bitcoin mining venture.
In a May 14 court filing in Illinois, multiple plaintiffs claim that Mills misappropriated over $3 million, failed to pay promised equity returns, and falsified documents to take full control of the company’s assets.
“Mills lied about transferring assets from Hashling NFT and diverted funds from a Bitcoin mining project,” the lawsuit alleges.
The investors, who helped fund and build the project, say they have received no compensation and that Mills ghosted them soon after launch.
Millions Raised, But No Returns Delivered
The plaintiffs claim to have raised a combined $1.46 million through two NFT drops on the Solana and Bitcoin blockchains, and invested additional capital into the mining project. Despite these contributions, they say no returns were ever paid.
Mills allegedly created a flawed shareholder agreement that gave him 67% ownership and voting control, while other investors received just 2% equity — even after contributing as much as $20,000 each.
He reportedly promised that their equity stakes would remain unchanged despite renaming the company to Satoshi Labs, but never followed through on those commitments.
“The agreement was rife with errors and designed to falsely validate Mills’ control,” the filing states.
Origin of the Hashling NFT Project
The Hashling NFT initiative emerged from an earlier idea discussed between Mills and plaintiff Dustin Steerman, who had previously collaborated with Mills. Despite admitting a lack of NFT experience or capital, Mills agreed to help push the project forward and brought on additional investors, now also plaintiffs.
According to Clinton Ind, the plaintiffs’ attorney, Mills’ early involvement was collaborative and encouraging:
“Even though that wasn’t the final idea, it emboldened the project. Everyone kind of enjoyed working together in the early stages,” Ind told Law360.
The team took the project seriously — developing NFT art, running social media campaigns, and attending industry conferences. Mills even persuaded his girlfriend to invest in the project.
Legal Action: Restitution, Trust, and Damages
The plaintiffs are now suing for:
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Fraud
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Breach of fiduciary duty
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Establishment of a constructive trust over all project assets
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Full legal restitution of misappropriated funds
They allege that Mills abused his control to enrich himself while cutting out original investors who helped launch both the NFT and mining ventures.
Cointelegraph reached out to Mills for comment but has not received a response.
Final Thoughts: A Familiar Pattern in Web3?
The case highlights growing concerns about founder accountability in the NFT and blockchain space, where rapid fundraising and minimal regulatory oversight can leave investors vulnerable to internal fraud.
As courts begin to address these disputes, the outcome of this case could set a precedent for how ownership, equity, and fiduciary responsibility are interpreted in decentralized ventures — particularly where investor protections remain unclear.
