According to the SEC complaint, Geosyn Mining CEO Caleb Joseph Ward and former COO Jeremy George McNutt defrauded approximately 64 investors. Between November 2021 and December 2022, Geosyn executives entered into agreements to purchase and run mining equipment on behalf of clients for a fee.
The regulator alleges that Geosyn had contracts with low-cost electricity suppliers, but charged customers 40-50% higher costs. Ward and McNutt assured investors that out of 1,400 mining devices, the company was unable to purchase 400 rigs. Moreover, its managers did not put into operation most of the purchased equipment.
Geosyn's agreements with investors stated that they could choose which cryptocurrencies to mine, but the company rejected requests from customers who chose something other than Bitcoin. The SEC alleges that Geosyn made payments to BTC investors to deceive them into believing that the mining equipment was actually working and profitable. In fact, the organizers of the scheme created false documents with fictitious profits.
According to the SEC, the company was supposed to pay investors $354,500 in bitcoins, but it only had $320,000 at its disposal. To make up the difference, McNutt bought additional bitcoins and transferred them to Ward, so that he, in turn, would transfer them to investors. The department also alleges that Geosyn executives misappropriated approximately $1.2 million and spent the money on a family trip to Disneyland and a luxurious lifestyle.
In October 2022, McNutt left the company and contacted the authorities, accusing his partner of embezzling funds, but he did not disclose his own wrongdoing. With Geosyn in dire financial straits, Ward emailed “IOUs” to investors in early 2023 and promised to file for bankruptcy in June, which never happened, the SEC said. The regulator demanded that the company's co-founders return the stolen money to investors and pay a fine.
Recall that the SEC recently demanded the recovery of $5.3 billion from Terraform Labs and its founder Do Kwon to compensate investors who suffered from the collapse of the Terra-Luna project in 2022.
Source: Bits

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