Crypto News– The SEC has initiated legal action against Geosyn Mining and its co-founders, alleging a fraudulent scheme that deprived investors of $5.6 million. The lawsuit, filed on April 24 in a federal court in Fort Worth, Texas, accuses Geosyn, CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt of deceiving approximately 64 investors.
SEC Files Lawsuit Against Bitcoin Miner Geosyn, Alleging 5.6M Dollars Fraud by Founders
The SEC claims that between November 2021 and December 2022, Geosyn sold service agreements as securities, promising to operate crypto mining rigs on behalf of customers for a fee. However, the SEC alleges that Geosyn misrepresented the number of mining rigs it operated and misused investor funds for personal expenses.
According to the lawsuit, Geosyn falsely claimed to have secured cheap energy contracts with electricity providers, when in reality, the costs were significantly higher. Additionally, the company allegedly failed to purchase 400 of the 1,400 mining rigs promised in the service agreements and did not activate most of the purchased machines.
Furthermore, Geosyn allegedly restricted investors’ ability to mine cryptocurrencies of their choice, insisting on mining only Bitcoin despite promises to the contrary.
The SEC accused the firm of issuing Bitcoin (BTC) payouts to investors in an attempt to deceive them into believing that their mining machines were operational and profitable, despite evidence to the contrary. Additionally, the SEC alleges that Geosyn fabricated mining production rates and profits by creating bogus documents.
The SEC alleged that Geosyn earned $320,000 from mining Bitcoin (BTC) but distributed approximately $354,500 worth to investors. To cover the shortfall, former operating chief Jeremy George McNutt allegedly bought Bitcoin and transferred it to CEO Caleb Joseph Ward for distribution to investors.
Furthermore, the SEC accused Ward and McNutt of misusing approximately $1.2 million in investor funds for personal expenses, including lavish items such as meals, nightclubs, vacations, guns, watches, and legal fees. One notable instance cited by the SEC involved McNutt allegedly using the firm’s credit card to fund a $20,000 Las Vegas nightclub wedding celebration for Ward and a $49,000 family trip to Disney World.
Additionally, the SEC claimed that Ward and McNutt spent $22,000 of investor funds on a breathalyzer device and other expenses related to separate arrests and convictions for drunk driving during a crypto conference in June 2022.
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