In a key decision on May 22, 2025, the Delaware Court of Chancery delivered a significant blow to the board of directors of Ionic Digital Inc., ruling that they breached their fiduciary duties to shareholders.
The ruling, which has been hailed as a victory for stockholder rights, has ignited criticism on social media, with shareholders and industry observers demanding the board’s resignation and a complete overhaul of the company’s governance.
The decision has also intensified scrutiny on Ionic Digital’s leadership, particularly as the company navigates a tumultuous period marked by internal instability and shareholder discontent.
The Delaware Court’s ruling stemmed from a lawsuit brought by concerned stockholders Tony Vejseli, Chris Villinger, and Brett Perry, who accused the Ionic Digital board of unjustly reducing the size of the board to entrench themselves and block shareholder-nominated directors.
According to the court, the board’s actions constituted an inequitable interference with a corporate election, specifically by limiting the number of directors that shareholders could elect at the company’s first Annual Meeting.
The court stated,
“The Board failed to prove that the Board Reduction Resolution was adopted for a valid, non-pretextual corporate purpose,” underscoring the self-serving motivations behind the board’s maneuvers.
As a result, Ionic Digital has been ordered to reopen its nomination window for two Class I director seats, giving shareholders a renewed opportunity to influence the company’s direction.
The ruling has amplified existing concerns about Ionic Digital’s governance.
Since the company’s formation 17 months ago, it has seen significant turnover, with five of its eight initial directors departing, alongside three CEOs, two CFOs, two Chief Legal Officers, and even its auditor resigning.
Shareholders have been unable to sell their shares due to restrictions and delays, combined with delays in publicly listing the company’s Class A Common Stock.
This instability has fueled frustration among investors, who feel increasingly trapped and undervalued.
The backlash on social media has been swift and scathing.
Mike Cagney, CEO of Figure Markets and a vocal critic of Ionic Digital’s board, took to X on May 22, 2025, to express his disbelief at the board’s response to the ruling.
“After reading their press release, I feel like the Ionic board lives in this weird, alter universe. The court found you breached your fiduciary duty. That is literally your only job as board members. If you had any integrity you’d resign.”
His post, which included a link to a more “accurate” press release, sparked a wave of replies from shareholders echoing his sentiments.
One user, @BrokeMnM , called the board “insane” for doubling down on misrepresentations just days after the court’s ruling, while another, @RobertP75415189, demanded to know when the board would “resign in disgrace.”
The outrage continued to build in the days following the ruling.
On May 23, 2025, Cagney shared another update on X, revealing that Ionic Digital’s board had issued another press release claiming that Figure Markets’ statements were “demonstrably false.”
Cagney countered sharply, stating:
“If by ‘demonstrably false,’ you mean backed by the Delaware Court of Chancery ruling that you breached your fiduciary duties… then sure, call it what you want.”
He urged shareholders to visit ionicvote.com to vote for new directors, Mike Abbate and Oliver Wiener, who have been endorsed by the plaintiffs in the lawsuit.
The court’s decision has also prompted further action from Figure Markets, which, alongside shareholder Veton Vejseli, has requested access to Ionic Digital’s records under Delaware law to investigate potential self-dealing by the board, including agreements with competitor Hut 8 Corp.
This development underscores the deepening rift between Ionic Digital’s leadership and its shareholders, who are increasingly vocal about their desire for transparency and accountability.
As Ionic Digital approaches its Annual Meeting, originally scheduled for March 17, 2025, the pressure on the board to address these grievances is mounting.
Shareholders, emboldened by the court’s ruling, are rallying for change, with many calling for the board to liquidate assets and return value to investors.
The coming weeks will likely be pivotal for Ionic Digital as it grapples with the fallout from this ruling and the growing demand for a leadership overhaul.