Crypto mining company Marathon Digital is facing legal action from the shareholders as the CEO Fred Thiel who is an American business executive and the current CEO of Thiel Advisors, and other senior executives are accused of breaching fiduciary duties, unjust enrichment, and wasting corporate assets.
The executives are being sued on five counts, including violations of the U.S. Exchange Act, breach of fiduciary duties, unjust enrichment, and waste of corporate assets.
The plaintiffs are also seeking compensation from Thiel for wrongful acts that led to a complaint against the company by the U.S. Securities and Exchange Commission (SEC).
The legal team representing the shareholders did not specify a compensation amount, leaving the decision to the court. The shareholders are also seeking to improve the company’s governance by enhancing the board’s oversight of operations, nominating at least four shareholder candidates, and abolishing the existing directors’ election process.
“The legal team alleges that the company’s management has been minimizing its issues, artificially boosting Marathon’s valuation, receiving excessive compensation, making profitable insider sales, and receiving unjustly high bonuses based on false and misleading statements,” said Benzinga.
“In May, Marathon received a subpoena from the SEC related to “transactions with related parties” that took place while it was establishing a facility in Montana,” said Benzinga.
In 2021, the regulator had ordered the company to produce documents and communications related to the same mining facility.
In May, Thiel discussed the company’s strategy to reduce 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 the price of Bitcoin also impacted the company’s quarterly results, Marathon was able to decrease its debt in March.
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Edited by Judy J. Rotich and Newsdesk Manager