The US-based crypto mining firm, Marathon Digital, is currently facing legal action from its shareholders. The shareholders have accused CEO Fred Thiel and other top executives of breaching their fiduciary duties, engaging in unjust enrichment, and misusing corporate assets.
On July 8, shareholders filed a complaint against Fred Thiel and nine other Marathon executives in the United States District Court of Nevada.
The lawsuit includes five claims, alleging violations of the U.S. Exchange Act, breach of fiduciary duties, unjust enrichment, and mismanagement of corporate assets.
The plaintiffs are seeking restitution from Thiel, Okamoto, Salzman, and Gallagher for their alleged wrongful acts, which led to a complaint filed by the Securities and Exchange Commission (SEC) against the company.
The shareholders’ legal team has not specified a particular amount for compensation, leaving it up to the court to determine the appropriate restitution.
Furthermore, the shareholders aim to improve the company’s governance structure by enhancing the Board’s oversight of operations.
They propose nominating at least four candidates from the shareholders to the Board and eliminating the previous procedure of director’s elections.
According to the legal team representing the shareholders, the management of the company has been minimizing the company’s problems and engaging in deceptive practices.
They allege that the management artificially inflated Marathon’s valuations, received excessive compensation, conducted insider sales for personal gain, and received unwarranted high bonuses based on false and misleading statements.
In May, Marathon faced a difficult situation when it received a subpoena from the Securities and Exchange Commission (SEC) regarding transactions with related parties, particularly during the establishment of their facility in Montana.
Additionally, in 2021, the regulator had already requested documents and communications related to the same mining facility from the company.
Surprisingly, despite these developments, just a few months ago in May, CEO Thiel expressed optimism about the company’s strategy to reduce its net loss.
He outlined plans to decrease the loss from $12.9 million ( $0.12 per share) in Q1 2022 to $7.2 million ($0.05 per share) in the current year.
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