This article is more than six months old

Milady NFTs lose 40% of their value as founders trade accusations in dueling lawsuits

Milady NFTs lose 40% of their value as founders trade accusations in dueling lawsuits
People & Culture
An incendiary legal fight threatens to subsume the Milady NFT project, leaving investors saddled with steep losses. Credit: Andrés Tapia
  • Venomous litigious duel between founders erupts in fourth-biggest NFT collection on Ethereum.
  • Milady fostered 'taboo' culture of outrage in contrast to the wide-eyed anime imagery in its avatars.
  • Legal fracas highlights struggling NFT market as bear market takes its toll.

Milady Maker, one of the most popular and controversial NFT projects, has been rocked by an unexpected turn of events: Its pseudonymous leaders filed clashing lawsuits this month accusing each other of fraud.

The days since then have perhaps been the most turbulent for the project, which is no stranger to chaos.

As its creators exchange accusations in court and social media, the value of Milady NFTs have plummeted 39%, to 2 ETH, or $3,460, in the last two and half weeks, according to DefiLlama data.

“A risk here to the Milady crew is that their project has always shrouded itself in mystery and intrigue as a rebellious and taboo art collective,” Dennis Pourteaux, an investor at Huat Ventures and guest lecturer at Harvard Business School who has written about Milady culture, told DL News.

“Now, amidst dueling lawsuits and equity disputes, there is a risk that the curtain gets pulled back and the warrior-poets are revealed as mere corporatists and litigants.”

Edgy history

With more than $10 million in trade volume over the past month, Milady is the fourth most-traded NFT collection on Ethereum, just below Pudgy Penguins, according to NFT data website Sea Launch. The collection has a market capitalisation of $33 million, according to CoinGecko.

The Milady collection is made up of almost 10,000 profile picture-style images of doll-like, doe-eyed anime girls drawn in what’s known as the “neochibi” style, which have proven popular with crypto influencers.

The collection’s ultra-cute aesthetic belies the project’s edgy history.

Join the community to get our latest stories and updates

Charlotte Fang, the pseudonymous face of the project, stepped down last year due to accusations on crypto Twitter that he was involved in white nationalist circles and a so-called “suicide cult.” (He called his involvement an elaborate troll.)

But he never really left.

In his lawsuit, filed on September 10 in the US District Court for the District of Nevada, Charlotte Fang outed himself as Nevada resident Krishna Okhandiar.

Milady

Okhandiar said he had appointed three independent contractors — Maxwell Roux, John Duff, and Henry Smith — to management positions at Milady’s parent company, Remilia Corporation.

The trio then hatched a scheme to seize Remilia’s intellectual property, money, and social media accounts in order to extort Okhandiar for equity in the company, his lawsuit alleges.

Hogwash, they said.

In a countersuit filed September 22 in the Court of Chancery for the State of Delaware, Roux, Duff, and Smith, as well as a fourth contributor named Bruno Nispel, filed a lawsuit of their own in which they insist they, too, are co-founders.

The four accuse Okhandiar of an elaborate scheme to make off with the money and the myriad brands under the Remilia umbrella, among other things.

“Despite his public resignation from the Milady Maker project (or perhaps because of it),” the second lawsuit reads, “Okhandiar started acting as if he single-handedly owns and controls the Collective Venture, its assets, and its treasury.”

Okhandiar, Smith, Duff, and Nispel did not return requests for comment from DL News.

‘Remilia Collective is a fellowship of pseudonymous net art extremists.’

—  Krishna Okhandiar

The lawsuits appear to have surprised observers, in part because some believed Remilia was an anarchic, online collective rather than a top-down company. Milady cultivated an edgy, nihilistic ethos celebrated by fans and investors.

“Remilia Collective is a fellowship of pseudonymous net art extremists,” Okhandiar wrote in an April 2022 blog post titled “What Remilia Believes In.” “Accreditation, provenance, patents, copyright are all burdens that strangle the free flow of the work.”

Pourteaux said Milady evokes 1970s punk rock culture. “Milady culture works like this: you say or do something outrageous, you get condemned by polite society, and then you revel in your infamy and use it to recruit new discontents ready to join in the mayhem,” he said.

The litigants agree that Remilia was in fact a conventional business. Yet that may be the only thing. Even basic facts about this company are in dispute.

Digital art collective

Okhandiar claims he founded Remilia in January 2021, the same month he hired Smith — known online by various handles, including “Sprite” and “Sonora Milady” — as an independent contractor in the role of artist.

Smith and company say the first Milady was made in August 2020 for Smith’s personal Twitter account. In September 2021, the five — Smith, his co-plaintiffs, and Okhandiar — created Remilia, “an unincorporated joint venture digital art collective association,” according to the lawsuit.

Nearly destroyed

Okhandiar says the others never asked for equity in Remilia when negotiating their contracts. Smith and company say they have documents that prove the five agreed at the outset they would be considered co-founders and co-owners of whatever company they eventually established.

That almost never happened.

“Okhandiar nearly destroyed the Milady Maker project and the entire Collective Venture in May 2022,” the lawsuit from Smith and company reads.

A month earlier, Miladys had become one of the top NFTs on Ethereum, with the cheapest in the collection selling for about $6,000.

But a “20-tweet megathread and detailed GitHub post” from DefiLlama developer 0xngmi catalogued a collection of disturbing writings by Okhandiar.

Okhandiar’s tweets and blog posts — often under other pseudonyms, such as Miya — espoused racism, homophobia, misogyny, and anti-Semitism. In tweets, Okhandiar claimed to be active in a “suicide cult,” and to “play a lot of high-level manipulation games” on “the lesser gender.”

A ‘performative’ departure

In a mea culpa, Okhandiar said he had been trolling and his “real views hold no room for hate.” He said he would step down and hand control to Smith and Nispel.

“They’ve been accused of doing and saying all sorts of terrible things, but a lot of this is perfomative — the outrage is the point and how the project works,” Pourteaux said.

In their lawsuit, Smith and his co-plaintiffs said Okhandiar eventually rejoined daily operations. Okhandiar recently said on X that his departure was indeed “performative” and he never really left.

In July 2022, he formed Remilia Corporation, and that October he formed Remilia Industries, according to the second lawsuit.

Smith and company say the entities were incorporated behind their backs, contrary to the agreement they all made when they started the business in 2021.

Worse still, Okhandiar began to withhold pay, they allege. Issues came to a head last month, when they sent Okhandiar a letter demanding back pay, equity in Remilia Corporation, seats on its board, and the return of “embezzled funds.”

Okhandiar says Roux, Duff and Smith were the ones to “misappropriate” Remilia’s money.

‘Needless to say those who threatened the blessed kingdom of Remilia for mere financial gain will face a dramatic and just retribution without sympathy.’

—  Krishna Okhandiar

Attempts to take control of Remilia’s crypto, social media accounts, and servers this summer were traced to the trio, according to Okhandiar’s lawsuit.

Their letter demanding equity in Remilia Corporation was the culmination of this move, which they planned in April, at Remilia Con, the collection’s confab in Japan, according to the lawsuit.

The antagonists on both sides have continued their fight on X.

Public spectacle

“Needless to say those who threatened the blessed kingdom of Remilia for mere financial gain will face a dramatic and just retribution without sympathy,” Okhandiar wrote the day after the lawsuit was filed.

“By targeting Remilia’s reserves, they attacked not just Remilia and the vision, but every one of you who has placed your faith in us.”

Nispel wrote in a tweet that he and his co-plaintiffs tried to avoid “a big public spectacle.”

“Months ago when we were preparing to raise and beginning to draft discussions about team equity, I started to get the suspicion that Charlie [Okhandiar] was angling to fuck me over,” he wrote.

“The other co-founders and I decided to lawyer up. Our goal was to move Remilia forward in a more serious direction. Also we wanted to protect ourselves.”

Have a tip about crypto legal matters? Contact the author at aleks@dlnews.com.