Mawson CEO Fired for Cause Amid Accusations of Fraud and Misconduct
Bitcoin mining and colocation provider Mawson Infrastructure has terminated its CEO and President, Rahul Mewawalla, for cause, accusing him of breaching fiduciary duties and committing fraud.
The fallout comes just months after Mawson awarded Mewawalla $2.5 million in cash bonuses, 1.2 million restricted stock units, and a base salary increase to $1.2 million in recognition of what it called “high-performing” executive performance.
But by May 30, the company notified Mewawalla that his termination for “Cause,” as defined in his employment agreement, was under consideration. The board placed him on administrative leave days later and appointed General Counsel Kaliste Saloom as interim CEO.
On July 8, the board made the termination official, revoked his board seat, and filed a lawsuit in Delaware’s Court of Chancery accusing Mewawalla of fiduciary breaches and fraud and seeking to recover damages.
Mewawalla has not yet commented on or responded to Mawson’s accusations. In a July 17 letter to the board, he said he “respectfully and vigorously” disagreed with the company’s characterization of events and pointed to the board’s own public praise of his leadership earlier this year.
He said in the letter that in recent public filings, the company highlighted “numerous strategic, operational, and financial milestones achieved” during his tenure, including 36% revenue growth, a 35% jump in gross profit, and reductions in SG&A expenses.
The dispute comes months after Mawson was sued by NYDIG’s parent company, Stone Ridge, and its mining subsidiary, Consensus Colocation, for allegedly taking control of more than 20,000 ASIC miners worth $30 million owned by NYDIG and hosted at Mawson’s Midland, Pennsylvania, facility.
Earlier this year, Canaan signed a three-year colocation deal with Mawson for the same Midland facility. The agreement involves approximately 64 megawatts of capacity to host 17,453 units of Canaan (NASDAQ: CAN)’s latest-generation machines, contributing to the 4.7 EH/s expansion of Canaan’s proprietary hashrate in North America.
