According to the SEC, cryptocurrency miner Geosyn produced “bogus documents” that included “fabricated mining rates and earnings” and boasted about buying an increased amount of mining equipment.
The US Securities and Exchange Commission (SEC) sued cryptocurrency miner Geosyn Mining on April 24th, claiming the company had deceived sixty-four investors out of $5.6 million. The SEC lawsuit claims that Geosyn and its founders misled customers about the cryptocurrency mining machines they ran and spent their customers’ money on themselves.
The SEC sued Geosyn and its executives in a Fort Worth, Texas, federal court, naming CEO Caleb Joseph Ward and former Chief Operating Officer Jeremy George McNutt. Additional charges include the sale of service agreements as securities between November 2021 and December 2022.
The SEC states in the complaint that Geosyn “falsely claimed” to have contracts with power suppliers to obtain cheap energy and to purchase and operate cryptocurrency miners for its clients. But the actual expenses were “as high as 40–50% over” the prices it advertised to clients.
The SEC further asserted that McNutt and Warn, co-founders of Geosyn, deceived investors about the company’s operations. Geosyn “never brought most of the purchased mining equipment online” and “failed to buy 400 of the 1,400 mining rigs” that the securities regulator claimed the company had promised its clients.
Although Geosyn first promised its clients the freedom to choose which cryptocurrency to mine, the company eventually decided it would only mine Bitcoin.
Crypto miner allegedly made “bogus paperwork” with “fabricated mining rates and earnings,” according to the SEC. “Believing that their mining devices were operational and profitable when they were not,” it told investors as it sent them Bitcoin payouts. Despite barely making $320,000 from Bitcoin mining, Geosyn distributed over $354,500 to its investors.
Additionally, the SEC claims that Ward and McNutt spent about $1.2 million that investors had given them on things like dinners, trips, entertainment, weapons, jewellery, and legal fees. According to reports, McNutt allegedly spent $20,000 on a “Las Vegas nightclub wedding party” for Ward and $49,000 on a family vacation to Disney World using the company’s credit card.
Also, during a crypto conference in June 2022, McNutt and Ward allegedly spent $22,000 from investor cash on a breathalyzer and other costs connected to McNutt’s and a Geosyn employee’s individual convictions for driving under the influence.
Towards the end of October 2022, McNutt resigned from his position as owner of the firm. In an effort to have McNutt investigated for theft, Ward contacted law enforcement “without reporting his own misappropriations,” according to the SEC.
In 2023, when Geosyn was in a terrible financial bind, Ward sent “IOU” notes to investors demanding payment for their Bitcoins and threatening to declare bankruptcy—something that never happened.
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