The SEC is suing Geosyn Mining and its executives for an alleged $5.6 million fraud. Allegedly, they lied about their mining operations and misappropriated funds for personal use.
Geosyn Mining accused of multiple deceptions towards its investors
On Wednesday April 24, the Securities and Exchange Commission of the United States filed a complaint with a federal court in Texas aimed at Geosyn Mining, its CEO Caleb Joseph Ward and the former Head of Operations Jeremy George McNutt.
According to the prosecution, Caleb and Jeremy would have misled some sixty investors between November 2021 and December 2022by selling them mining services agreements presented as securities.
According to the SEC, Geosyn Mining sold these deals promising to buy and manage crypto mining platforms on behalf of customers. However, the company reportedly made misrepresentations concerning its electricity supply contracts. While it claimed to benefit from advantageous tariffs, the latter were in fact 40% to 50% higher than advertised to investors.
The U.S. Securities and Exchange Commission also states that Geosyn Mining lied about the number of machines actually deployed. Of the 1,400 platforms promised, 400 were never purchased, and most of the equipment acquired was never put into service.
What’s more, although the agreements made with investors theoretically allowed them to choose which cryptocurrency to mine, Geosyn Mining would have accepted only bitcoin mining. To maintain the illusion of a business in line with customer expectations, they were provided with false documents showing overstated production rates and profits.
Embezzlement of $1.2 million
The accusations of the SEC are not limited to broken promises. The leaders of Geosyn Mining would also have misappropriated approximately $1.2 million of investor funds for personal use.
According to the complaint, McNutt would even used the company’s bank card to pay $20,000 wedding expenses for Ward in Las Vegas, and a family trip to Disney World worth $49,000.
An additional $22,000 would have been used to pay for legal fees related to the arrests of McNutt and an employee from Geosyn Mining for drunk driving at a crypto conference in June 2022.
Late 2022, as new investments dried up, Geosyn Mining found itself in a critical financial situation, with less than $1900 in the bank. Unable to generate profits due to the absence of the advantageous electricity contracts promised to investors, the company was on the verge of bankruptcy in early 2023.
Following the departure of McNutt in October 2022, Ward contacted the authorities to report his partner’s embezzlement, without mentioning his own involvement. He then sent investors IOUs and announced a bankruptcy filing that never took place.
Faced with these accusations, the SEC is now calling for a permanent injunction, repayment of the funds allegedly misappropriated and sanctions against Geosyn Mining and its executives.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
