SEC takes legal action against Geosyn, a Bitcoin mining company, for conducting an unregistered securities offering worth $5.6m.
The U.S. Securities and Exchange Commission (SEC) has taken legal action against Geosyn Mining, a Bitcoin mining company based in Texas, for allegedly participating in an unregistered and deceitful securities offering. The lawsuit also names Geosyn’s founders, Caleb Joseph Ward and Jeremy George McNutt, as defendants.
According to the SEC, Geosyn and its founders raised over $5.6 million from approximately 64 investors between November 2021 and December 2022 by selling investment contracts. However, the defendants are accused of withholding crucial information from new investors, such as the fact that they had not purchased or activated mining machines for some previous investors.
The SEC further claims that Geosyn failed to disclose that it did not provide the services it promised in its offering documents, such as personalized crypto mining strategies and round-the-clock monitoring of mining machines.
In addition to these allegations, the lawsuit states that Ward and McNutt misused around $1.2 million for personal purposes. They also made payments totaling approximately $354,500 to investors, claiming that these were distributions from the company’s mining activity. However, internal messages exchanged between the defendants reportedly reveal the need to buy Bitcoin to fully finance these distributions.
The SEC has accused Geosyn and its founders of violating federal securities laws related to anti-fraud and registration provisions. The regulator is seeking various forms of relief from the court, including permanent injunctions, the disgorgement of unlawfully obtained profits with prejudgment interest, civil penalties, and any other appropriate remedies.
This legal action by the SEC against Geosyn comes shortly after the regulator filed a lawsuit against Coinbase, a popular cryptocurrency exchange, and closely followed the SEC’s crackdown on Ethereum-related activities.
