The shareholders of Marathon sue the company’s leadership

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The U.S.-based cryptocurrency mining company Marathon Digital is headed to court after shareholders alleged that CEO Fred Thiel and other top executives breached fiduciary duties, unjustly enriched themselves, and squandered corporate assets.

On July 8, a shareholder complaint was lodged against Fred Thiel and nine other Marathon executives in the United States District Court for the District of Nevada. Five claims are being used to prosecute the company executives. Among them are violations of the United States Securities Exchange Act, a transgression of fiduciary duties, unjust enrichment, and the waste of corporate assets.

The chief executive officer and other senior executives are accused of breaching fiduciary responsibilities, unjust enrichment, and waste of corporate assets.

The U.S.-based cryptocurrency mining company Marathon Digital is bound to court after shareholders alleged that CEO Fred Thiel and other top executives violated fiduciary duties, unjustly enriched themselves, and frittered away corporate assets.

On July 8, a shareholder complaint was filed in the United States District Court for the District of Nevada against Fred Thiel and nine other Marathon executives. The company’s executives are being prosecuted on the basis of five claims. Among them are violations of the Securities Exchange Act of the United States, breaches of fiduciary duties, illegitimate enrichment, and the waste of corporate assets.

In addition, the plaintiffs seek a potential contribution from Thiel, Merrick Okamoto, Simeon Salzman, and Hugh Gallagher for illegal actions that resulted in a Securities and Exchange Commission (SEC) complaint against the company. The legal team representing the shareholders did not ask the defendants for a specific quantity of compensation, leaving that decision to the court.

In addition, the shareholders plan to improve the company’s governance by increasing the board’s supervision of operations, nominating at least four shareholders to the board, and eliminating the previous method of director elections.

According to the legal team, the company’s management has been downplaying its problems, inflating Marathon’s valuation artificially, receiving excessive compensation, engaging in lucrative insider sales, and receiving unjustifiably inflated bonuses based on false and misleading statements.

In May, the SEC issued a subpoena to Marathon “relating to, among other things, transactions with related parties” that occurred during the construction of its Montana facility. Prior to that, in 2021, the regulator demanded that the company produce documents and communications for the same mining facility.

In May, Thiel described the company’s plan to reduce its net loss from $12.9 million ($0.12 per share) in the first quarter of 2022 to $7.2 million ($0.05 per share) in the first quarter of 2023. He was optimistic.

Despite the fact that the price of Bitcoin BTC $29,809 also affected the company’s quarterly results, Marathon was able to reduce its debt in March. The mining company repaid its term loan with Silvergate Bank, thereby releasing the collateral of 3,132 BTC. Marathon stated at the time that the action would reduce its annual financing costs by $5 million and eliminate $50 million in debt.