SEC Sues Bitcoin Miner Geosyn, Accusing Founders of $5.6M Fraud

SEC Sues Bitcoin Miner Geosyn, Accusing Founders of $5.6M Fraud


The US securities regulator has filed charges against Geosyn Mining and its co-founders, alleging they defrauded investors out of $5.6 million by lying about its crypto mining volume while using customer funds for personal expenses.

The Securities and Exchange Commission indicted April 24 in federal court in Fort Worth, Texas, alleging Geosin, CEO Caleb Joseph Ward and former executive Jeremy George McNutt defrauded nearly 64 investors in servicing agreements sold as securities between November 2021 and December 2022.

The SEC alleges that Geosyn had contracts with electricity suppliers to get cheap power, but in reality, the costs were 40-50% higher than the prices, in which it “falsely claimed” that the contracts to buy and manage crypto miners on behalf of customers were paid. He told the customers.

Ward and McNutt lied to investors about Geosyn's operations, the SEC said. It is alleged that GOC did not buy 400 of the 1,400 mining rigs it contracted to buy and “did not bring most of the purchased mining machines online.”

okex

Geosyn deals investors can choose to mine crypto, the lawsuit says, but the company has rejected requests to mine other than Bitcoin (BTC).

Ward (left) and McNutt (right) at the Geosyn Institute in Springtown, Texas in 2022. Source: Geosyn Mining

The SEC said the company made BTC payments to investors “to make them believe that their mining machines were operational and profitable when they weren't” and “falsified documents on the amount and profit of mining products made.”

He earned $320,000 from mining BTC but gave around $354,500 to investors, the SEC alleges. To make up the difference, McNutt bought bitcoins and sent them to Ward to transfer them to investors, the regulator said.

The SEC also alleged that Ward and McNutt misappropriated nearly $1.2 million in investor funds for personal use such as meals, nightclubs, vacations, guns, watches and legal fees, including when McNutt allegedly used the firm's credit card for $20,000 in “celebrations” for Ward and $49,000. A family trip to Disney World.

At the June 2022 crypto conference, Ward and McNutt used another $22,000 of investor funds on respirators and other expenses related to McNutt and Geosyn's staff.

e8fe3cde 23fb 47dc aa2a e9b5bceb0084
Highlighted SEC claims regarding drunk driving incident. Source: SEC

In the year By the end of 2022, new investor funds had dried up and Geocin had less than $1,900 in the bank — “because it was unable to make a profit because it lacked the good electricity contracts that the defendants offered to investors,” the SEC said.

Related: FBI warning about crypto money transmitters targets mixer

Added in October 2022, McNutt relinquished ownership. Ward contacted authorities to report McNutt “without disclosing his misconduct,” the SEC said.

With Geosyn in “serious financial trouble” in early 2023, Ward emailed investors an “IOU” they owed on Bitcoin notes and said he would file for bankruptcy in June, which never happened, according to the SEC.

The regulator has asked for a permanent injunction, fines for alleged misconduct and fines against the trio.

Geosyn, Ward and McNutt could not immediately be reached for comment.

Magazine: Crypto Regulation – Does SEC Chairman Gary Gensler Have Final Comments?

Leave a Reply

Pin It on Pinterest