Legal Action Against Marathon Digital Executives Alleging Breach of Duties
- Shams Ul Zoha
- July 19, 2023
- 1:33 pm
WHAT YOU SHOULD KNOW
- Marathon Digital is facing a shareholder complaint in the U.S. District Court of Nevada, with allegations against CEO Fred Thiel and nine other executives for breaching fiduciary duties and wasting corporate assets.
- The shareholders are suing on five counts, including violations of the U.S. Exchange Act and unjust enrichment.
- The legal team representing the shareholders aims to enhance the company’s governance by improving board oversight, nominating shareholder candidates, and abolishing the existing directors’ election process.
Marathon Digital, a cryptocurrency mining company, is facing legal action from its shareholders, who have filed a complaint against CEO Fred Thiel and other senior executives. The lawsuit, lodged in the United States District Court of Nevada, accuses Thiel and the executives of breaching fiduciary duties, engaging in unjust enrichment, and wasting corporate assets. The plaintiffs have raised five counts against them, including violations of the U.S. Exchange Act, breach of fiduciary duties, unjust enrichment, and waste of corporate assets.
The shareholders are seeking compensation from Thiel for alleged wrongful acts that resulted in a complaint against the company by the U.S. Securities and Exchange Commission (SEC). However, the legal team representing the shareholders has not specified a compensation amount, leaving the decision to the court’s discretion. Additionally, the shareholders are pushing for improvements in the company’s governance by enhancing board oversight, nominating at least four shareholder candidates, and abolishing the existing directors’ election process.
The legal team’s allegations against Marathon Digital’s management include claims of downplaying issues to artificially inflate the company’s valuation, receiving excessive compensation, engaging in profitable insider sales, and obtaining unjustly high bonuses based on false and misleading statements. In May, the company received a subpoena from the SEC related to “transactions with related parties” during the establishment of a facility in Montana. Despite facing challenges, Marathon Digital aims to reduce its net loss and decrease debt through its strategic planning, even as the price of Bitcoin influences its quarterly results.
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