SEC Sues Geosyn Mining over Alleged Fraudulent Activities
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
Geosyn, along with Ward and McNutt, raised around $5.6 million from over 60 investors between November 2021 and December 2022, as per the SEC.
- Investors were told that Geosyn would purchase, operate, and distribute crypto assets mined by mining machines like Bitcoin (BTC) for a fee.
- The defendants are accused of making false claims, failing to disclose key information, and not delivering promised services.
Geosyn falsely claimed to have advantageous contracts with electricity providers, ensuring profitability of the mining machines. However, they did not disclose essential information to investors.
- The mining company did not inform new investors of the non-purchase of mining machines for previous investors.
- Geosyn also failed to provide promised services like personalized mining strategies and 24/7 monitoring.
Ward and McNutt reportedly misused around $1.2 million for personal expenses, distributing $354,500 to investors as profits despite Geosyn’s lack of profitability.
The SEC filed a complaint in the US District Court for the Northern District of Texas, charging the defendants with violations of federal securities laws.
- The SEC is seeking permanent injunctions, officer-and-director bars, disgorgement with interest, and civil penalties, specifically against Ward and McNutt.
Crypto Users Warned By The FBI
The FBI issued a warning to Americans about using unregistered cryptocurrency money-transmitting services that do not comply with federal law.
- Individuals were advised to use registered Money Services Businesses (MSBs) to combat potential illicit financial activities.
- Using unlicensed crypto transfer services could lead to financial disruptions during law enforcement actions if funds are commingled with illegally acquired money.
Cryptocurrency money transmitting services breaking the law or enabling illegal transactions will be investigated by law enforcement. Using non-compliant services may result in losing access to funds during crackdowns on such businesses.
Hot Take: Stay Informed to Avoid Risks
It’s crucial for crypto users to stay informed about potential fraudulent schemes and to engage only with registered and compliant services. Following regulations and conducting due diligence can help protect your investments and assets in the volatile crypto landscape.
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