The chief executive officer and other top officials are accused of breaking fiduciary duties, misusing company assets, and unfair enrichment.
Marathon Digital, a U.S. crypto mining organization, is going to court following allegations by its shareholders that Fred Thiel, the CEO, and other top officials broke fiduciary duties, misused corporate assets, and enriched themselves unfairly.
Executives Charged with Breaching Fiduciary Duties and Violating the Securities Exchange Act
On July 8, a complaint by shareholders against Fred and nine Marathon officials was filed in the U.S. District Court for the District of Nevada. The executives’ lawsuit is founded on five claims: breaching the United States Securities Exchange Act, unfair enrichment, breaching fiduciary duties, and misusing company assets.
The petitioners are also pushing for revenge from Okamoto, Thiel, Salzman, and Gallagher for unjust deeds, resulting in a complaint against the organization by the United States Securities and Exchange Commission (SEC). The shareholders’ attorneys did not request a particular sum from the accused. Instead, the decision concerning any compensation was left to the court.
Directors’ Election Procedure Adjusted as Shareholders Set to Join Marathon Board
Reinforcing the board’s supervision of operations, eliminating the previous directors’ election procedure, and nominating at least four people from shareholders to the board are the shareholder’s other objectives and are meant to amend the organization’s governance.
The legal team claims that the organization’s management has been trivializing its issues, acquiring unnecessary compensation, making profitable insider sales, and using confusing and false messages to receive unreasonably high bonuses.
Marathon Date with Securities and Exchange Commission
In May, the SEC sent Marathon a subpoena concerning transactions with associated parties as it developed its facility in Montana. Before that, in 2021, the agency compelled the organization to reveal the mining facility’s communications and documents.
Nevertheless, Thiel was hopeful in May as he explained the organization’s strategy for minimizing its net loss from $12.9 million ($0.12 per share) in the first quarter of 2022 to $7.2 million ($0.05 million per share) in 2023.
Marathon Digital Optimistic of Recovery
Marathon reduced its debt in March despite the organization’s quarterly results affecting Bitcoin’s price. In this case, the mining company settled a term loan with Silvergate Bank, which freed up the 3132 BTC held as the loan’s security.
Marathon claimed the intervention would eradicate debt worth $50 million and minimize its yearly borrowing cost by $5 million.
Debt reduction coincides with Bitcoin prices rallying to their highest in the year. The sustained price rally would boost Marathon Digital’s profits, unlike during the cold winter period, when Bitcoin prices plunged below the mining cost amid rising energy bills.
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