The SEC has filed a lawsuit against Geosyn Mining, a Bitcoin mining company, and its founders, Caleb Joseph Ward and Jeremy George McNutt, for allegedly engaging in an unregistered securities offering. The company is accused of raising over $5.6 million from investors through deceptive practices, such as misrepresenting their mining capabilities and failing to disclose critical information. The SEC alleges that the defendants misappropriated funds and made payments to investors from sources other than their mining activity.
SEC Charges Cryptocurrency Mining Company With Securities Fraud, Alleging Misleading Investment Offering
In a significant move, the United States Securities and Exchange Commission (SEC) has initiated legal proceedings against Geosyn Mining, a Texas-based Bitcoin mining firm, and its founders, Caleb Joseph Ward and Jeremy George McNutt. The SEC's complaint accuses the defendants of engaging in an unregistered and deceptive securities offering, raising over $5.6 million from investors.
According to the SEC's allegations, between November 2021 and December 2022, Geosyn and its principals solicited investments by selling "investment contracts" to approximately 64 individuals, raising a total of $5.6 million. The commission asserts that the defendants employed deceptive practices to entice investors, including falsely claiming that Geosyn possessed favorable contracts with electricity providers, enabling it to operate cryptocurrency mining machines profitably.
Furthermore, the SEC alleges that Geosyn withheld crucial information from investors, such as the fact that the company had failed to acquire or activate mining machines for certain prior investors. Additionally, the complaint contends that Geosyn misrepresented its services, failing to disclose that it was not providing personalized crypto mining strategies or round-the-clock monitoring of mining equipment as stated in its offering documents.
The lawsuit also alleges that Ward and McNutt misappropriated approximately $1.2 million of investor funds for personal use. The SEC further alleges that the defendants distributed approximately $354,500 to investors, claiming they were derived from mining activities. However, internal communications among the defendants allegedly reveal that Bitcoin was purchased to fund these distributions.
The SEC charges Geosyn and its founders with violating federal securities laws by failing to register their securities offering and engaging in fraudulent conduct. The commission seeks a permanent injunction against the defendants, disgorgement of wrongfully obtained gains with interest, civil penalties, and other equitable relief as deemed appropriate by the court.
This enforcement action underscores the SEC's commitment to protecting investors from fraudulent and unregistered securities offerings in the cryptocurrency industry. The commission's allegations against Geosyn and its founders serve as a reminder that companies and individuals involved in cryptocurrency and other innovative financial ventures must adhere to established regulatory frameworks and disclose all material information to potential investors.
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