SEC Charges Texas-Based Cryptocurrency Mining Company Geosyn and Co-Founders with $5.6 Million Fraud Scheme
The U.S. Securities and Exchange Commission (SEC) has taken action against Texas-based cryptocurrency mining and hosting company Geosyn, along with its co-founders Caleb Ward and Jeremy McNutt, for their alleged involvement in a fraud scheme totaling $5.6 million.
According to the SEC’s complaint filed on Wednesday, the company and its founders are accused of misleading over 60 investors between November 2021 and December 2022. The charges claim that Geosyn made false representations about miner purchases and operations, failing to disclose to new investors that previous investors had not received promised mining machines or services outlined in offering documents.
Furthermore, the SEC alleges that Ward and McNutt misrepresented having favorable contracts with electricity providers, with actual costs reportedly 40-50% higher than disclosed to investors. The complaint also states that the co-founders misused $1.2 million of investor funds for personal expenses, including family vacations, guns, and watches.
To cover up operational issues and financial shortfalls, Geosyn and its co-founders reportedly made periodic bitcoin distributions to investors, despite only generating about $320,000 from mining activities. McNutt allegedly purchased additional bitcoin personally to cover the shortfall.
The situation worsened in late 2022 when Geosyn’s funds dwindled, leading to McNutt’s resignation after Ward accused him of embezzlement. Following his departure, Ward informed investors via email that owed bitcoin payments would be made later.
The SEC is now seeking a permanent injunction against all defendants, requiring them to repay misappropriated funds and face additional penalties for their actions. The agency emphasizes that each defendant acted knowingly or with severe recklessness.
Investors are urged to exercise caution and due diligence when considering investments in the cryptocurrency space, as cases like this highlight the risks involved. Stay tuned for further updates on this developing story.
