Layer1 CEO alleges co-founder is using majority power to ‘ransack’ company

The plaintiffs claim the Dolic and Ebel began to conduct unauthorized business activities when the corporate governance of its parent company, Enigma, collapsed.

The CEO of crypto miner Layer1 Technologies has filed a lawsuit against the firm’s two other board members — including co-founder Jakov Dolic — for allegedly commandeering Layer1's operations for their own gain.

Chief executive John Harney and DGF Investments Inc — a British Virgin Islands-based investment firm — filed the lawsuit against Dolic and fellow board member Tobias Ebel in Delaware’s Chancery Court on Feb. 2.

The lawsuit alleges that both Dolic and Ebel used a power vacuum at Layer1’s equity parent Enigma to seize control of the Bitcoin mining company and operate it as their "own personal fiefdom.”

Harney and DGF Investments Inc — which owns a majority stake in Enigma — claim the defendants have "usurped the authority" of Layer1's CEO and prevented Harney from "responsibly operating Layer1."

One of the accusations made against Dolic and Ebel alleges they executed “large unauthorized transactions” that were not recorded in Layer1’s financial reporting and that they use Layer1’s operations to mine Bitcoin (BTC) and keep the revenue for themselves:

“Dolic and his loyalists” have “wielded their majority board control to ransack Layer1, operating it for their own benefit and engaging in self-dealing transactions with impunity.”

The plaintiffs also claimed that Dolic continues to press the false narrative that he owns 77% of Layer1’s equity. In the filing, the plaintiffs argued that Dolic sold all of his Layer1 stock to Enigma for $16 million on Jan. 24, 2022.

*Harney and DGF Investments’ court filing in the Delaware court. Source.* *Bloomberg Law.*

Harney and DGF have stressed that without imminent judicial intervention to confirm that Enigma has 100% ownership of Layer1, there is nothing that can stop Dolic and Ebel from "operating" the company "for their own benefit."

The latest lawsuit filed against Dolic and Ebel alleges a breach of fiduciary duty, pursuant to section 226 of the Delaware General Corporation Law.

The Plaintiffs are hoping to seek relief from the court via an injunction, have their fees paid for by the defendants and order an appointed custodian to run the company.

Layer1 Technologies was the first United States-based Bitcoin mining company to have fully integrated renewable energy into its operations, according to a 2020 report.

Cointelegraph reached out to Dolic for comment but did not receive an immediate response.

<div>Former FTX US President lashes out at 'insecure' SBF in 49-part Twitter thread rant</div>

Bankruptcy

Harrison said Bankman-Fried threatened to fire him on the spot and would destroy his professional reputation if he continued to confront the former FTX CEO.

Former FTX US President Brett Harrison has lashed out at Sam Bankman-Fried for manipulating and threatening colleagues who proposed solutions to reorganize FTX US' management structure.

Harrison shared his experiences with Bankman-Fried and FTX US on Dec. 14, explaining how he was hired “casually over text” in Mar. 2021 after working together at New York-based trading firm Jane Street for a few years.

But six months into Harrison's tenure at FTX US, “cracks began to form” between the two, he said.

Despite recalling Bankman-Fried to be a “sensitive and intellectually curious person” at first, Harrison said he saw “total insecurity and intransigence” in Bankman-Fried when confronted with conflict, particularly when Harrison suggested FTX US establish separate branches for its executive, developer and legal teams.

16/49 I saw in that early conflict his total insecurity and intransigence when his decisions were questioned, his spitefulness, and the volatility of his temperament. I realized he wasn’t who I remembered.
— Brett Harrison (@BrettHarrison88) January 14, 2023

Harrison added that he “wasn’t sure what accounted for the dramatic change” in Bankman-Fried’s erratic behavior, though he suspected mental health issues may have been a "contributing factor."

Part of that irrational behavior Harrison describes included a series of gaslighting and manipulation tactics Bankman-Fried used against Harrison and other colleagues in their bid to clean up FTX US' corporate mess.

Harrison also recalled his last attempt to fix FTX US’ organization issues with Bankman-Fried, claiming that he threatened to “destroy my professional reputation” if a formally apology wasn’t received:

29/49 In response, I was threatened on Sam’s behalf that I would be fired and that Sam would destroy my professional reputation. I was instructed to formally retract what I’d written and to deliver an apology to Sam that had been drafted for me.
— Brett Harrison (@BrettHarrison88) January 14, 2023

Harrison said that event “solidified” his decision to leave.

As for the fraud charges now laid against Bankman-Fried and other FTX colleagues, Harrison said he was blinded by the firm’s alleged commingling and misuse of billions of dollars of customer funds:

“I never could have guessed that underlying these kinds of issues — which I’d seen at other more mature firms in my career and believed not to be fatal to business success — was multi-billion-dollar fraud.”

“If any one of us had suspected let alone learned the truth, we would have reported them immediately,” he added.

Bankman-Fried was granted bail after posting a $250 million bond guarantee and pleading not guilty to all eight criminal charges laid against him on Jan. 3.

Harrison stepped down as FTX US President on Sept. 27 — about five weeks before FTX catastrophically collapsed — where he stated that he moved into an advisory role.

Corporate Structure