In a recent development, the US Securities and Exchange Commission (SEC) has filed a lawsuit against Geosyn Mining and two of its co-founders. According to the SEC, they obtained approximately $5.6 million from investors through deception.
The indictment, filed April 24 in Fort Worth, Texas, alleges that the company and its leaders defrauded investors by lying about the number of crypto mining platforms they operated and using customer funds for personal purposes.
Possibly deceived more than 60 investors
The SEC alleges that Geosyn, its CEO Caleb Joseph Ward and former chief operating officer Jeremy George McNutt defrauded approximately 64 investors by selling them service agreements that were securities between November 2021 and December 2022. The agreements alleged that Geosyn had low-cost energy contracts to operate of crypto miners. In reality, however, the costs were significantly higher than what was presented to customers.
In addition, Ward and McNutt are accused of lying about Geosyn’s actual activities. According to the SEC, the company had failed to purchase 400 of the 1,400 agreed upon mining platforms, and much of the equipment it purchased never became operational. The company also prevented investors from mining cryptocurrencies other than Bitcoin, despite promising to do so.
Fictitious documents provide misleading information
The SEC further revealed that Geosyn created fictitious documents to suggest that the mining equipment was profitable when it was not. She reported that the company made $320,000 from mining Bitcoin, yet paid out $354,500 to investors. To mask this shortcoming, McNutt and Ward purchased Bitcoin to meet investor payouts.
It is further alleged that Ward and McNutt embezzled approximately $1.2 million of the invested money for personal expenses such as meals, nightclubs, vacations, weapons and watches. One particularly striking detail was a claim about a costly “nightclub wedding” in Las Vegas and a family trip to Disney World.
By the end of 2022, as funds from new investors dried up, Geosyn had less than $1,900 in its bank account, which the SEC said shows the company was unable to generate profits without the favorable electricity contracts promised to investors.
The SEC is now seeking a permanent ban on further trading activities for those involved, reimbursement of the embezzled funds and imposition of further sanctions.
Source: https://newsbit.nl/amerikaanse-toezichthouder-start-rechtszaak-tegen-cryptobedrijf-wegens-miljoenenfraude/
