David Attlee14 hours agoMarathon shareholders file lawsuit against company’s top managementThe CEO and other top executives are accused of a breach of fiduciary duties, unjust enrichment and wasting corporate assets.12411 Total views23 Total sharesListen to article 0:00NewsJoin us on social networksUnited States-based crypto mining company Marathon Digital is heading to court after its shareholders alleged that its CEO Fred Thiel, alongside other top executives, breached fiduciary duties, unjustly enriched themselves and wasted corporate assets.

A shareholder complaint against Fred Thiel and nine other Marathon executives was filed in the United States District Court for the District 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. Securities Exchange Act, a breach of fiduciary duties, unjust enrichment and wasting corporate assets.

The plaintiffs also demand a potential contribution from Thiel, Merrick Okamoto, Simeon Salzman and Hugh Gallagher for wrongful acts leading to a U.S. Securities and Exchange Commission (SEC) complaint against the company. The legal team representing the 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 company’s governance 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.

Related:Marathon Digital blames weather conditions for mining 21% less Bitcoin in June

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 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 building its facility in Montana. Before that, in 2021, the regulator ordered the firm to produce documents and communications for the same mining facility.

However, Thiel was optimistic in May when 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) in 2023.

Although the price of Bitcoin (BTC) 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 BTC 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.

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