SEC Sues Bitcoin Miner Geosyn for $5.6M Fraud
The SEC has commenced legal action against Geosyn Mining, LLC, and its founders, Caleb Joseph Ward and Jeremy George McNutt, alleging that they defrauded investors of $5.6 million.
SEC sues Geosyn mining
According to a filing on April 24, the SEC sued Geosyn in a Texas federal court for raising about $5.6 million from over 60 investors from November 2021 to December 2022. U.S. Securities and Exchange Commission argues that the company misrepresented to investors a deal to purchase, maintain, and operate cryptocurrency mining equipment and to share the profits from mined cryptocurrency such as Bitcoin for a fee.
The complaint also states that Geosyn made false representations of its contracts with power suppliers, did not disclose that it did not acquire several mining machines, and did not provide the services that were promised.
The SEC alleges that the contracts that underpinned promises to buy and operate cryptocurrency mining equipment for clients in return for a fee were deceptive. It is claimed that Geosyn had contracts with the power companies for cheap electricity. But the real costs came to 40-50% more than those which were promised to the customers.
Geosyn mining illicit gains
The Securities and Exchange Commission stated that the company made Bitcoin payments to its investors thus giving them the impression that their mining equipment was operational and producing profits, while in reality, it was not. Also, the company supplied counterfeit documents which portrayed fabricated mining productivity and profits.
The organization of the company was charged by the SEC for earning $320,000 from Bitcoin mining activities and then paying out nearly $354,500 to its investors. McNutt sent the balance of the shortfall to Ward who passed it on to the investors, as per the regulator’s statement.
Moreover, the SEC claims that Ward and McNutt misappropriated approximately $1.2 million of the investors’ money for their personal expenses such as dining, nightlife, vacations, firearms, watches, and legal fees. This covers a particular instance where McNutt is reported to have used the company’s card to finance a wedding bash of $20,000 at a Las Vegas night club for Ward and a $49,000 family vacation to Disney World.
The commission is seeking permanent injunctions, the return of ill-gotten gains with interest before judgment, and monetary penalties against both Ward and McNutt.
