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Breaking News: Is The Approval Of Crypto ETFs At Risk? SEC Operations Frozen By Gov. Shutdown
Bitcoin

Texas Crypto Mining Firm And Co-Founders Face SEC Charges In $5M Fraud Allegations

Ronaldo Marquez
by Ronaldo Marquez
1 year ago
·
Posted in Crypto News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

The US Securities and Exchange Commission (SEC) has taken legal action against Geosyn Mining, LLC, a Texas-based crypto mining and hosting company, and its co-founders, Caleb Ward and Jeremy McNutt, over allegations of engaging in unregistered and fraudulent activities.

Geosyn’s Alleged Fraud Scheme

According to the SEC, Geosyn, Ward, the company’s CEO, and McNutt, the firm’s then-COO, raised approximately $5.6 million from more than 60 investors between November 2021 and December 2022. 

According to the complaint, Geosyn told investors it would purchase, operate, and distribute crypto assets mined by mining machines, such as Bitcoin (BTC), for an undisclosed fee. 

However, the SEC alleges that the defendants made false claims, failed to disclose material information to investors, and failed to provide the services promised in their offering documents.

Related Reading: Ripple Vs. SEC Lawsuit: Court Gives Regulator Tight Deadline To Strike Back

The complaint also notes that Geosyn falsely claimed to have favorable contracts with electricity providers, supposedly ensuring the mining machines’ profitable operation. 

Furthermore, the crypto mining company allegedly failed to disclose to new investors that they had not purchased mining machines for some previous investors, and they did not disclose that Geosyn was not fulfilling its stated services, including personalized mining strategies and 24/7 onsite monitoring. 

The SEC also alleges that Ward and McNutt misappropriated approximately $1.2 million for personal use and distributed around $354,500 to investors as purported profit distributions despite Geosyn’s “lack of profitability.”

The SEC has filed the complaint in the US District Court for the Northern District of Texas, charging the defendants with violations of antifraud and securities-registration provisions of federal securities laws. 

Ultimately, the SEC seeks permanent injunctions against all defendants, officer-and-director bars, disgorgement with prejudgment interest, and civil penalties, specifically against Ward and McNutt.

Crypto Users Warned By The FBI

The US Federal Bureau of Investigation (FBI) has issued a warning to American citizens about using unregistered cryptocurrency money-transmitting services. 

In a statement released by the FBI’s Internet Crime Complaint Center (IC3) on Thursday, individuals were cautioned against engaging with services that do not comply with federal law and fail to adhere to anti-money laundering (AML) regulations.

The FBI emphasized the importance of using cryptocurrency money-transmitting services registered as Money Services Businesses (MSBs) and following the necessary protocols to combat alleged illicit financial activities conducted by these companies. 

Related Reading: Shiba Inu Devs Schedule Shibarium Hard Fork For May 2: Details

According to the Bureau’s statement, individuals who use unlicensed crypto money transfer services may experience “disruptions” to their finances during law enforcement actions, particularly if their crypto holdings are commingled with funds acquired through illegal means. The statement concluded with the following warning:

Cryptocurrency money transmitting services that purposely break the law or knowingly facilitate illegal transactions will be investigated by law enforcement. Using a service that does not comply with its legal obligations may put you at risk of losing access to funds after law enforcement operations target those businesses.

Crypto
The daily chart shows the total crypto market cap’s valuation at $2.28 trillion. Source: TOTAL on TradingView.com

Featured image from Shutterstock, chart from TradingView.com 

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ronaldo Marquez

Ronaldo Marquez

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Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.

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