In a case that’s sending shockwaves through both the NFT and Bitcoin communities, the founder of an NFT project and Bitcoin mining venture is now facing serious legal trouble after being accused of defrauding his former business partners.
Jonathan Mills, the man at the center of the controversy, is being sued by a group of disgruntled investors who allege that he quietly diverted millions of dollars from their joint ventures into a company under his control — and then cut them out of the profits entirely.
The lawsuit, filed on May 14 in Illinois, paints a picture of betrayal and mismanagement. According to court documents, the plaintiffs say they initially partnered with Mills on the Hashling NFT project and a related Bitcoin mining operation. They claim to have trusted Mills with both leadership and financial responsibility — a decision they now regret.
What began as a collaborative venture in the world of NFTs and crypto mining soon turned sour. The investors allege that Mills falsely claimed he was transferring funds and assets from the original projects to a legitimate holding company, Satoshi Labs LLC (formerly Proof of Work Labs LLC), where he was both founder and CEO. But instead of safeguarding their investments, they claim he used this structure to seize control and siphon off funds.
According to the complaint, at least $3 million was moved into Satoshi Labs without the knowledge or consent of the partners. They also allege that a total of $1.46 million raised from two NFT drops — one on Solana and the other on the Bitcoin network — vanished without any returns ever being distributed to investors.
Mills, they say, then vanished from communication, leaving them in the dark. The plaintiffs further accuse him of crafting a shareholder agreement riddled with errors, which was supposedly designed to bolster his claim that Satoshi Labs owned all of the original project’s assets.
That agreement, they argue, was grossly imbalanced. It gave Mills a commanding 67% equity share and voting power in the company, while the other contributors — some of whom had invested up to $20,000 — were left with a measly 2% each. And while Mills assured them that their equity positions would remain intact following the company’s name change, no returns ever followed.
Despite these alleged red flags, Mills had previously won the trust of his partners. One of the plaintiffs, Dustin Steerman, had worked with Mills in the past and was reportedly the one who first collaborated with him to bring the Hashling NFT concept to life.
Interestingly, Mills had no prior experience in NFTs and even admitted he had no funds to contribute at the time. Still, his enthusiasm — and an initial creative spark — encouraged the group to move forward together.
“Mills had a willingness to push the project forward. He brought energy, even if the original idea changed,” said Clinton Ind, the plaintiffs’ legal representative, in a comment to Law360.
As the Hashling NFT project grew, the founding group pulled in more supporters. They handled everything from creating digital art and managing social media campaigns to physically representing the project at major NFT conferences in New York. At one point, Mills even convinced his girlfriend to invest, signaling strong personal commitment — or perhaps, as the plaintiffs now argue, a calculated move to strengthen his control.
The plaintiffs are not just seeking damages. They’re also requesting the court to impose a constructive trust over all project-related assets, along with full legal restitution for what they believe was a deliberate scheme to leave them high and dry.
Cointelegraph attempted to reach out to Jonathan Mills for comment but received no immediate response.
As the lawsuit unfolds, it serves as a cautionary tale in the still-evolving NFT and crypto space. Even in a decentralized world, trust remains a central pillar — and when it’s broken, the consequences can be severe.
