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SEC Files $5.6M Lawsuit Against Geosyn Bitcoin Miner For Fraud

by BSCN

April 26, 2024

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The lawsuit, filed on April 24 in Fort Worth, Texas, details how around 64 investors were allegedly defrauded by the company's deceptive practices.

The U.S. Securities and Exchange Commission (SEC) has initiated a lawsuit against Geosyn Mining and its co-founders, Caleb Joseph Ward and Jeremy George McNutt, accusing them of orchestrating a $5.6 million fraud. 

 

This legal action, filed on April 24 in a federal court in Fort Worth, Texas, details a series of deceptive practices purportedly employed by the company to defraud about 64 investors.

Detailed Allegations

Geosyn Mining allegedly misrepresented its operational capacities and financial dealings, effectively selling service agreements under the guise of legitimate securities. 

 

The SEC charges that Geosyn significantly overstated its relationships with electricity providers, falsely claiming to secure energy at rates 40-50% lower than actual costs. This misinformation played a critical role in misleading investors about the feasibility and profitability of their investments.

 

Moreover, the company is accused of not providing the services it claimed in its offering documents. These services included personalized crypto mining strategies and 24/7 monitoring of mining equipment, which were never implemented.

Misappropriation of Funds

According to the SEC, Ward and McNutt diverted approximately $1.2 million of investor funds for personal use. This misuse included extravagant expenditures such as meals, nightclubs, vacations, firearms, watches, and substantial legal fees. 

 

Noteworthy misappropriations cited in the lawsuit include a $20,000 expenditure on a Las Vegas nightclub wedding celebration for Ward and a $49,000 family trip to Disney World funded by the company.

 

The allegations extend to cover approximately $22,000 used by the founders on expenses related to legal issues and other items linked to separate incidents involving drunk driving during a crypto conference in June 2022. 

 

McNutt reportedly left the company in October 2022, relinquishing ownership, after which Ward reported him to authorities for embezzlement, without disclosing his misappropriations.

False Representations to Investors

The SEC's complaint also outlines how the co-founders engaged in deceptive practices to maintain investor confidence. They are accused of creating bogus documents that showed fabricated mining production rates and profits. 

 

Despite Geosyn Mining only generating $320,000 from mining activities, the company disbursed approximately $354,500 to investors, presenting these payouts as profits from successful mining operations.

 

McNutt allegedly purchased Bitcoin independently to cover these distributions and sent it to Ward to distribute among investors, further perpetuating the illusion that the mining operations were both operational and profitable.

Financial Strains and False Promises

By early 2023, Geosyn faced severe financial difficulties, leading Ward to issue IOU notes to investors for Bitcoin they were owed. In June, Ward indicated plans to file for bankruptcy, which never materialized, adding to the layers of deceit reported by the SEC.

 

The SEC's lawsuit seeks significant penalties against Geosyn and its founders, including permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and other equitable relief. 

Disclaimer

Disclaimer: The views expressed in this article do not necessarily represent the views of BSCNews. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. BSCNews assumes no responsibility for any investment decisions made based on the information provided in this article

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