Key Points
- The US SEC has filed a lawsuit against crypto miner Geosyn, accusing them of defrauding over 64 investors of $5.6 million.
- Geosyn’s founders are alleged to have misused about $1.2 million of investor funds for personal expenses.
On April 24, the US Securities and Exchange Commission (SEC) initiated legal proceedings against Geosyn Mining. This cryptocurrency mining company and its founders are accused of swindling more than 64 investors out of $5.6 million.
The SEC’s lawsuit claims that Geosyn and its founders misrepresented the crypto-mining rigs they managed and misused the customers’ investments for personal expenses.
Details of the Lawsuit
The lawsuit, filed in a federal court in Fort Worth, Texas, names Geosyn, its CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt. They are accused of selling service agreements as securities from November 2021 to December 2022.
According to the SEC, Geosyn made false claims about the agreements to purchase and operate crypto miners on behalf of its customers. The company also reportedly lied about having contracts with electricity providers for cheap energy, while the actual costs were significantly higher.
Furthermore, the SEC alleges that co-founders Warn and McNutt misled investors about Geosyn’s operations. The company initially promised its customers 1,400 mining rigs but failed to purchase 400 of them. Most of the purchased mining machines were never brought online.
Geosyn’s agreements also indicated that customers could select the cryptocurrency they wanted to mine. However, the company later refused to mine anything other than Bitcoin.
Alleged Misuse of Funds
The SEC also claims that Ward and McNutt misappropriated about $1.2 million of investor funds for personal expenses. These expenses included meals, nightclub outings, vacations, firearms, timepieces, and legal fees.
There were also instances of McNutt purportedly using the company’s credit card for a $20,000 wedding celebration in a Las Vegas nightclub for Ward and a $49,000 family trip to Disney World.
Ward and McNutt are also alleged to have spent $22,000 of investor funds on a breathalyzer device and other expenses related to McNutt and a Geosyn employee’s separate arrests and convictions for driving under the influence during a crypto conference in June 2022.
In October 2022, McNutt left the company and relinquished his ownership. Ward then reportedly contacted the authorities to report McNutt for embezzlement without disclosing his own misappropriations.
After facing financial difficulties in 2023, Ward issued “IOU” notes to investors for their owned Bitcoins and stated that Geosyn would file for bankruptcy, which never occurred.
