Chair

Bitcoin

Gary

The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Geosyn Mining and its co-founders, alleging they defrauded investors out of $5.6 million by lying about the number of crypto mining rigs it operated while using customer money for personal expenses.
The SEC’s April 24 <a href="https://www.sec.gov/litigation/litreleases/lr-25983" target="_blank" rel="noopener nofollow">lawsuit</a> in a Fort Worth, Texas federal court claimed Geosyn, its CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt defrauded around 64 investors through service agreements <a href="https://cointelegraph.com/news/what-are-the-howey-test-and-its-implications-for-cryptocurrency">sold as securities</a> between November 2021 and December 2022.
The SEC alleged the agreements to buy and run crypto miners on customers’ behalf for a fee “falsely claimed” Geosyn had contracts with electricity providers for cheap energy, but in reality, the costs were “as high as 40-50% above” the rates it told customers.
Ward and McNutt also lied to investors about Geosyn’s operations, the SEC claimed. It alleged of the 1,400 mining rigs Geosyn entered into service agreements to purchase, it failed to buy 400 of them and “never brought most of the purchased mining machines online.”
Geosyn’s agreements told investors they could choose what crypto to mine, the suit claimed, but the firm rejected <a href="https://cointelegraph.com/news/bitcoin-mining-revenue-107-m-ath-btc-halving-day">requests to mine anything</a><a href="https://cointelegraph.com/news/bitcoin-mining-revenue-107-m-ath-btc-halving-day"></a> other than Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>).
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-04/cc17747c-880b-4758-845b-aaccbe2cbc33.jpg%3Fw%3D800%26ssl%3D1" alt="" title="">
 <figcaption style="text-align: center;">
 Ward (left) and McNutt (right) at Geosyn’s facility in Springtown, Texas in 2022. Source: Geosyn Mining
 </figcaption>
</figure>
The SEC said the firm made BTC payouts to investors to make them “believe that their mining machines were operational and profitable when they were not” and created “bogus documents” with “fabricated mining production rates and profits.”
It earned $320,000 from mining BTC but gave around $354,500 worth to investors, the SEC alleged. To make up the difference, McNutt purchased Bitcoin and sent it to Ward to pass on to investors, the regulator said.
The SEC also claims Ward and McNutt misappropriated around $1.2 million in investor funds for personal use such as meals, nightclubs, vacations, guns, watches and legal fees, including a case where McNutt allegedly used the firm’s credit card on a $20,000 “Las Vegas nightclub wedding celebration” for Ward and a $49,000 family trip to Disney World.
It claimed Ward and McNutt used another $22,000 of investor funds on a breathalyzer device and other expenses relating to McNutt and a Geosyn employee’s alleged separate arrests and convictions for drunk driving during a June 2022 crypto conference.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-04/e8fe3cde-23fb-47dc-aa2a-e9b5bceb0084.png" alt="" title="">
 <figcaption style="text-align: center;">
 Highlighted excerpt of the SEC’s claims relating to the alleged drunk driving incident. Source: SEC
 </figcaption>
</figure>
By the end of 2022, new investor funds dried up, and Geosyn had less than $1,900 in the bank — “unable to make a profit because it did not have the favorable electricity contracts that Defendants touted to investors,” the SEC said.
Related: <a href="https://cointelegraph.com/news/fbi-warning-crypto-money-transmitter-appears-aimed-samouri-wallet">FBI warning against crypto money transmitters ‘appears’ to be aimed at mixers</a>
It added that in October 2022, McNutt left and gave up ownership. Ward allegedly contacted the authorities to report McNutt for embezzlement “without disclosing his own misappropriations,” the SEC said.
With Geosyn in “dire financial straits” in early 2023, Ward emailed investors “IOU” notes for their owed Bitcoin. In June, he said it would file for bankruptcy, which never happened, according to the SEC.
The regulator asked for a permanent injunction, the repayment of the alleged misappropriation, and penalties to be leveled against the trio.
Geosyn, Ward and McNutt could not be immediately reached for comment.
Magazine: <a href="https://cointelegraph.com/magazine/crypto-regulation-sec-chair-gary-gensler-final-say/">Crypto regulation — Does SEC Chair Gary Gensler have the final say?</a>

SEC sues Bitcoin miner Geosyn, accusing founders of $5.6M fraud

Cointelegraph

在 2024年4月26日發表的其他文章

Bitcoin moving toward bear zone? ETFs data suggest this

BlockDAG Targets $30 by 2030 Following $20.7M Presale & Moon-Shot Keynote Amid Litecoin Growth & ...

Ripple switched ODL services for US customers from XRP to USDT

Cryptocurrency Price Trends and Market Insights

BloFin Sponsors TOKEN2049 Dubai and Celebrates the SideEvent: WhalesNight AfterParty 2024

Risks of Using Unregistered Crypto Money Transmitting Services

訂閱免費電子報，每天收取加密貨幣最新動態！