Layer1 CEO accuses founder of running it as his ‘own personal fiefdom’

San Francisco-based Bitcoin mining company Layer1 Technologies has been hit with a lawsuit by its own CEO John Harney and investment firm, DGF Investments. 

The complaint accuses Layer1’s founder Jakov Dolic and board member Tobias Ebel of exploiting an alleged state of corporate paralysis at the Swiss private equity firm Enigma Holding (Layer1’s parent company) to seize control of the mining company and loot it for personal gain.

The lawsuit — filed by John Harney and DGF Investments Inc. in Delaware’s Chancery Court —accuses Dolic of attempting to run Layer1as his “own personal fiefdom.”

Dolic and Ebel have “wielded their majority board control to ransack Layer1, operating it for their own benefit and engaging in self-dealing transactions with impunity,” according to the filing. The complaint accuses the duo of “actively looting the company for their own profit.”

Filing details

Originally filed under seal on Jan. 30, the filing states that Dolic and Ebel are “already executing a scheme to wrest control of Layer1 and its assets from Enigma.” The duo are accused of trying to exploit a leadership void created when Enigma’s board abruptly resigned in response to wrongdoing, which has created a potentially lengthy “interregnum.”

Enigma Holding is a holding company owning cryptocurrency-related enterprises, Bloomberg Law recently reported, believed to be the sole stockholder of Layer1. In early 2022, Layer1 became a subsidiary of Enigma when company leaders, including Dolic, exchanged their Layer1 shares for Enigma stock or cash, with Dolic reportedly cashing out for more than $16 million, per court filings. 

However, the lawsuit claims that Dolic and Ebel are now “taking unspecified steps to unwind the merger,” telling Layer1 employees that Dolic owns 77% of the Bitcoin miner. The complaint calls the move “a canard designed to mislead Layer1 personnel into following Dolic’s directions” and warns that “time is not on Layer1’s side.”