Geosyn Mining Founders Face SEC Fraud Charges Over $5.6 Million Crypto Scam
NAIROBI (Coinchapter.com) – The Securities and Exchange Commission (SEC) is taking legal action against Geosyn Mining founders and the company itself. The SEC alleges the company fraudulently obtained $5.6 million from investors. The lawsuit highlights claims that the Geosyn Mining founders lied about the number of crypto mining rigs and misused investor funds for extravagant personal expenses.
Notably, the SEC’s complaint outlines a pattern of deception. Geosyn allegedly duped investors with fabricated energy contracts and claims about the operational status of mining rigs. Furthermore, investor funds were allegedly spent on lavish holidays, nightclub splurges, and even legal fees related to a drunk driving incident.
How the Alleged Fraud Unfolded
Moreover, according to the SEC, the scheme ran from November 2021 to December 2022. Geosyn reportedly lured in over 60 investors by offering agreements where they’d buy and operate crypto miners for a fee. Geosyn promised low energy costs thanks to favorable electricity contracts, but the SEC claims those contracts were bogus, and costs were actually up to 50% higher than advertised.
Things get even messier. While promising investors a choice in what to mine, Geosyn allegedly forced them into Bitcoin. In fact, the firm failed to buy hundreds of promised mining rigs, and most of those it did purchase never even went online. To hide this, the SEC says Geosyn used its limited Bitcoin mining profits and even bought extra coins to create fake payouts for investors.
Geosyn Founders Luxurious lifestyles funded by investor cash
The SEC paints a picture of blatant misuse of funds. Approximately $1.2 million of investor money was allegedly spent on non-business expenses. These include extravagant nightclub parties, luxury vacations, and personal purchases like firearms and watches.
In fact, if you think this is just about bad business decisions, hold on tight. The SEC claims that a hefty chunk of investor money fueled the founders’ extravagant lifestyles. We’re talking a $20,000 Vegas wedding bash for Ward, a $49,000 Disney World family trip, nightclub blowouts, fancy guns, and watches—all paid for with funds meant for crypto mining. The SEC even alleges drunk driving arrests for McNutt and another Geosyn employee—with the company footing the legal bills.
Certainly, the party ended when new investor money dried up in late 2022. Geosyn’s bank account dwindled, and the SEC says the firm couldn’t turn a profit with its inflated electricity costs. Moreover, to avoid scrutiny, Ward allegedly tried to pin embezzlement on McNutt, conveniently ignoring his own misappropriations. Pathetically, in a desperate move, Ward reportedly emailed investors “IOU” notes for their owed Bitcoin before hinting at bankruptcy, which never materialized.
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