This is likely true, but in the hacker news thread about this, the non Nazi cofounder was pretty defensive about what a great guy he was, and that there was just no way that him being a Nazi could ever effect Mullvad itself:

Here's one example, but these linked thread has more excuses hes made:

kfreds 1 day ago | root | parent | next [–]

I'm sorry to hear that. For what it's worth I think there's nuance in his decision that most people don't see. Of course that doesn't mean I think it was the right decision to make.

Here's something worth considering: why would someone whose ideal is open borders, who has been an animal rights activist, and someone who has led Mullvad for 17 years (with the track record it has), choose to donate to this party? If you like what Daniel and I have done together over the past 17 years, and now vehemently oppose his choice to make this donation, doesn't that make you just a little bit curious?

It made me curious. It didn't change my ultimate stance, but it did temper my emotions about it.

https://news.ycombinator.com/threads?id=kfreds

That level of denial feels custom made for them to give him a pass and keep him onboard.