If you have been closely following the crypto news, you’d be aware of how Marathon Digital, a US-based crypto mining company, has recently come under legal scrutiny. The company’s top executives, inclusive of its CEO Fred Thiel, have been accused by shareholders of breaching fiduciary responsibilities, unjust enrichment, and, unsurprisingly, wastage of corporate assets.
These accusations emerged on July 8, with an official complaint lodged against Thiel and nine other executives from Marathon in the United States District Court of Nevada. The charges range from violating the U.S. Exchange Act to committing wastes of corporate resources. As a response, the plaintiffs have demanded compensation from Thiel, Okamoto, Salzman, and Gallagher for their harmful actions, which led to a Securities and Exchange Commission (SEC) complaint.
While no specific sum of compensation was requested by the shareholders’ legal team, a hefty fine is expected. Moreover, they aim to modify Marathon’s governance by fortifying the Board’s supervision of operations, proposing at least four new candidates for the Board, and altering the previous directors’ election procedures. These moves signal an environment ripe for substantial changes on Marathon’s corporate landscape.
Interestingly, the claims against Marathon’s management do not end here. Legal statements suggest that the company’s management has been understating its problems, artificially inflating Marathon’s valuation, and have been lavishly receiving excessive compensation. Marathon’s mishandlings led the SEC to issue a subpoena in May for transactions with associated parties during the establishment of a facility in Montana.
However, some might remember how Thiel portrayed Marathon’s strategy for cutting loss optimistically just in May. And it seemed promising with the mining firm successfully reducing its debt in March via a term loan payoff with Silvergate Bank. The act liberated the 3,132 BTC held as collateral for the loan, eliminating a $50 million worth of debt and diminishing Marathon’s annual borrowing cost by $5 million.
The future developments in this case are awaited, as this saga between the shareholders and Marathon’s management unfolds, shedding more light on Marathon’s future and the implications this might hold for other entities in the ever-turbulent crypto landscape.
Source: Cointelegraph
