A United States-based crypto mining company, Marathon Digital, heads to court, as its shareholders allege that CEO Fred Thiel, alongside other top executives, committed a breach of fiduciary duties, unjust enrichment and waste of corporate assets.
A shareholder complaint against Fred Thiel and nine other Marathon executives was filed in the United States District Court of Nevada on July 8. The company executives are being sued on the basis of five claims. Among them are violations of the U.S. Exchange Act, breach of fiduciary duties, unjust enrichment, and waste of corporate assets.
The plaintiffs also demand retribution from Thiel, Okamoto, Salzman and Gallagher for wrongful acts, leading to the Securities and Exchange Commission (SEC) complaint against the company. The legal team, representing shareholders, didn’t request a specific sum from the defendants, leaving it to the court to decide on any compensation.
The shareholders also aim to correct the governance of the company by strengthening the Board’s supervision of operations, nominating at least four candidates from shareholders to the Board and eliminating the previous procedure of directors’ elections.
According to the legal team, the company’s management has been downplaying its problems, artificially inflating Marathon’s valuation, receiving excessive compensation, making lucrative insider sales and receiving unjustifiably elevated bonuses based on the false and misleading statements.
In May, Marathon received a subpoena from the SEC, “relating to, among other things, transactions with related parties” that occurred while it was creating the facility in Montana. Before that, in 2021 the regulator ordered a firm to produce documents and communications for the same mining facility.
However, only a couple of months ago, in May, Thiel was optimistic while explaining the company’s strategy for reducing its net loss from $12.9 million ($0.12 per share) in Q1 2022 to $7.2 million ($0.05 per share) this year.
Although Bitcoin’s price also affected the company’s quarterly results, Marathon managed to reduce its debt in March. The mining firm paid off a term loan with Silvergate Bank, freeing up the 3,132 Bitcoin held as collateral for the loan. At the time, Marathon said the move would eliminate $50 million worth of debt and reduce its annual borrowing cost by $5 million.
For more news at Break’n News – click here
Break’n Pics – Click here for Free Stock Photos
GoCoin – Latest Cryptocurrency News and Trading