SEC Sues Bitcoin Miner Geosyn for $5.6M Fraud

The SEC has initiated legal action against Geosyn Mining, LLC, and its founders, Caleb Joseph Ward and Jeremy George McNutt, accusing them of scamming investors of $5.6 million.

SEC sues Geosyn mining 

The SEC filed a lawsuit in a Texas federal court accusing Geosyn of raising around $5.6 million from more than 60 investors from November 2021 to December 2022, according to a filing on April 24.  The U.S. Securities and Exchange Commission claims that the company deceived investors by making false promises of purchasing, maintaining, and operating cryptocurrency mining equipment and offering to share the profits from mined cryptocurrencies like Bitcoin for a fee.

The complaint further alleges that Geosyn falsely represented its agreements with power suppliers, failed to reveal that it did not acquire certain mining machines, and ultimately did not deliver the promised services.

The SEC accused that the contracts promising to purchase and operate cryptocurrency mining equipment for clients in exchange for a fee were misleading. According to the allegations, Geosyn purported to have deals with power companies for low-cost electricity. However, the actual expenses were significantly higher, reaching 40-50% more than what was initially communicated to the customers.

Geosyn mining illicit gains 

The Securities and Exchange Commission reported that the company distributed Bitcoin payments to its investors, leading them to assume that their mining equipment was functioning and generating profits despite the opposite being true. Additionally, the firm produced fake documents that presented made-up mining efficiency and earnings.

The SEC accused the company of generating $320,000 through Bitcoin mining operations but then distributing approximately $354,500 to its investors. To cover this shortfall, McNutt acquired additional Bitcoin and forwarded it to Ward, who then distributed it to the investors, as per the regulatory body’s statement.

Furthermore, the SEC alleges that Ward and McNutt diverted about $1.2 million of the funds from investors for personal expenditures, including dining, nightlife, holidays, firearms, timepieces, and legal costs. This includes a specific incident where McNutt is said to have used the company’s credit card to fund a $20,000 wedding celebration at a Las Vegas nightclub for Ward and a $49,000 family vacation to Disney World.

Additionally, the SEC points out that Ward and McNutt spent $22,000 of investor money on a breathalyzer and other costs linked to separate incidents involving McNutt and an employee of Geosyn, who were both reportedly arrested and convicted for DUI at a crypto event in June 2022.

The post SEC Sues Bitcoin Miner Geosyn for $5.6M Fraud first appeared on Coinfea.