Bitcoin mining company Layer1 caught up in internal legal battle

Bitcoin mining company Layer1 caught up in internal legal battle

Layer1 Technologies CEO John Harney and DGF Investments Inc. have filed a lawsuit against Jakov Dolic and Tobias Ebel, the other board members of the bitcoin (BTC) mining firm for allegedly looting the company for their personal gains.

According to a lawsuit filed in State of Delaware by John Harney, the CEO of embattled crypto mining firm Layer1 Technologies, in conjunction with DGF Investments Inc., Jakov Dolic (Layer1 co-founder) and Tobias Ebel (Dolic’s personal attorney and representative), active board members of the company are taking advantage of its current crisis to loot and misappropriate the company’s funds.

For the uninitiated, layer1 is a San Francisco-based company that claims to build cutting-edge energy-efficient bitcoin mining data centers. 

The plaintiff alleges that the defendants (Dolic and Tobias) have taken advantage of the loophole created in Layer1 following the abrupt resignation of the CEO and CTO of its parent company, Enigma, (the only two members of Enigma’s board of directors) earlier in Oct. 2022, to ransack Layer1 and run it for their own benefit.

A section of the lawsuit reads that Dolic and Ebel usurped control of Layer1 and operated it as their own personal entity. Therefore, its parent stock Enigma was paralyzed. In October 2022, Enigma’s CEO and CTO resigned, leaving Enigma with no discernible corporate governance.

Maintaining the status quo 

The plaintiffs further alleged that the defendants have interfered with the authority of Layer1’s CEO, in several ways, including by hiring their own family members to work as Layer1 contractors, making it impossible for him to responsibly operate the firm until Enigma’s governance issues are resolved.

Furthermore, Dolic claims that he owns a 77% stake in Layer1, but the plaintiffs described it as a “demonstrably false” information.

According to them, Dolic has not been a Layer1 stakeholder since Jan. 24, 2022, when he transferred all of his Layer1 common and preferred stock to Enigma. It was a part of arrangement allegedly designed to “transfer enough Layer1 stock to Enigma for them to pursue a squeeze-out merger” and become the sole owner of Layer1.

The plaintiffs claim the merger deal was successfully concluded in April 2022, and as part of its terms, all outstanding shares of Layer1 stock not owned by its parent firm, Enigma, were canceled and therefore became invalid.

However, despite the foregoing, Dolic allegedly sent an email to a Layer1 contractor, claiming that the miner is 77% owned by him, and revealed his intention to execute a 20-year lease of Layer1’s entire energy supply to a new company owned by himself.

Against that backdrop, the plaintiffs, Harney and DGF have prayed to the court to “preserve the status quo; confirm Enigma’s 100% ownership of Layer1; and prevent defendants’ continued usurpation of Layer1 to the detriment of Enigma and its stockholders,” until the company has totally resolved its governance issues and established a functioning corporate governance structure.

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