SEC Files Fraud Charges Against Texas-Based Geosyn Mining and Its Co-Founders
The U.S. Securities and Exchange Commission (SEC) has announced the filing of charges against Geosyn Mining, LLC, a Texas-based crypto asset mining and hosting company, and its co-founders, Caleb Ward (CEO) and Jeremy McNutt (former COO).
The charges are based on allegedly engaging in an unregistered and fraudulent securities offering. The complaint, filed in the U.S. District Court for the Northern District of Texas, alleges that the defendants violated federal securities laws’ antifraud and registration provisions.
Key points:
- Geosyn Mining, LLC, and its co-founders raised approximately $5.6 million from over 60 investors between November 2021 and December 2022.
- The company claimed it would purchase, maintain, and operate crypto asset mining machines and distribute mined crypto assets to investors for a fee.
- The defendants allegedly made false claims about having favorable contracts with electricity providers, enabling profitable mining machine operations.
- Geosyn failed to disclose to new investors that it never purchased mining machines or brought them online for some previous investors.
- The company did not provide services claimed in its offering documents, such as personalized mining strategies and 24/7 onsite monitoring.
- Co-founders Ward and McNutt allegedly misappropriated about $1.2 million for personal use and paid approximately $354,500 to investors as purported profit distributions.
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According to the SEC’s complaint, Geosyn Mining and its co-founders misled investors by making false claims about the company’s operations and profitability.
The defendants allegedly told investors that Geosyn had secured favorable contracts with electricity providers, which would enable the company to operate its mining machines profitably. However, the complaint suggests that these claims were untrue.
SEC alleges that Geosyn failed to disclose critical information
Furthermore, the SEC alleges that Geosyn failed to disclose critical information to new investors. This includes the fact that the company had never purchased mining machines or brought them online for some of its previous investors.
The complaint also asserts that Geosyn did not provide the services it claimed to offer in its offering documents. This includes allowing investors to personalize their crypto asset mining strategy and providing round-the-clock onsite monitoring of the mining machines.
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The SEC’s complaint also alleges that co-founders Ward and McNutt misappropriated approximately $1.2 million of the $5.6 million raised from investors for their personal use.
Additionally, the defendants allegedly paid investors around $354,500 in purported profit distributions. This is despite the fact that Geosyn appears to never be profitable. a result of these alleged violations, the SEC is seeking permanent injunctions against all defendants.