US-based cryptocurrency mining firm Marathon Digital is facing legal action from shareholders who allege that CEO Fred Thiel and other executives breached their fiduciary duties, engaged in unfair enrichment, and misused company assets. The lawsuit was filed on July 8 in the US District Court for the District of Nevada and includes five claims, including violations of US securities exchange laws and waste of company assets.
The plaintiffs are seeking potential contributions from Thiel, Merrick Okamoto, Simeon Salzman, and Hugh Gallagher, which led to the SEC filing a complaint against the company. The amount of damages has not been specified by the shareholders' legal team, leaving it up to the court to determine.
The shareholders also aim to improve corporate governance by strengthening the board's oversight, nominating at least four board candidates from among shareholders, and eliminating the previous director election process. its issues, artificially inflated Marathon's valuation, received excessive compensation, engaged in lucrative insider sales, and received unreasonable bonuses based on false and misleading statements.
In May, Marathon received a subpoena from the US Securities and Exchange Commission (SEC) regarding transactions with related parties during the building of its Montana plant. Additionally, in 2021, regulators demanded the company to provide documents and communications related to the same mining facility. Despite the challenges, Thiel expressed optimism about the company's strategy to reduce net losses and manage debt. Marathon successfully reduced its debt by paying off the Silvergate Bank term loan, freeing up 3,132 bitcoins used as collateral, eliminating $50 million worth of debt, and reducing annual borrowing costs by $5 million.
