Marathon Digital executives get into hot waters after shareholders file a lawsuit.
Marathon Digital, a renowned cryptocurrency mining entity based in the US, faces legal action as shareholders raised allegations against the company's highest-ranking officials.
On July 8th, Fred Thiel and a team of nine other Marathon leaders pushed into a legal skirmish, with a formal complaint lodged in the United States District Court for the District of Nevada.
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The accused parties are facing a series of charges, which include breaches of fiduciary duties, inappropriate enrichment, mishandling corporate resources, and contravening the US Securities Exchange Act.
Furthermore, the plaintiffs are pressing for compensation from Thiel, Merrick Okamoto, Simeon Salzman, and Hugh Gallagher, whom they hold responsible for actions that led to a complaint filed by the US Securities and Exchange Commission (SEC) against Marathon.
Interestingly, the legal representatives of the shareholders have abstained from demanding a specific compensation amount, leaving the court to make that determination.
On top of that, Marathon Digital shareholders aim to bring about significant governance reforms in the company. They are pushing to intensify the board's operational oversight, introduce at least four shareholder-nominated candidates into the board, and revamp the traditional director election process.
The legal team behind the shareholders asserts that Marathon's executives have been glossing over the company's internal issues. The top executives are accused of inflating Marathon's valuation artificially, drawing excessive compensations, participating in advantageous insider trading, and pocketing substantial bonuses from misleading and false statements.
Marathon was previously subpoenaed by the SEC in May, raising concerns over related party transactions that occurred during the construction of their Montana-based mining facility. The regulatory body also demanded the company provide documents and communications related to the same facility in 2021.
Following the shareholder lawsuit, Marathon Digital finds itself in turbulent waters, facing both legal and financial challenges.
