Key Takeaways
- SEC claims that the defendants raised over $5.6 million from “through the sale of investment contracts.”
- SEC has sought a permanent injunction, the repayment of the alleged misappropriation, and penalties to be levelled against its founders.
The U.S. Securities and Exchange Commission (SEC) is taking legal action against Geosyn Mining and its co-founders for allegedly deceiving investors, resulting in a $5.6 million loss. As per the lawsuit filed on April 24 in a Texas federal court, Geosyn, CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt are accused of tricking almost 64 investors between November 2021 and December 2022.
The regulator claims the defendants raised over $5.6 million from “through the sale of investment contracts.”
In the lawsuit. SEC alleges that the defendants failed to disclose critical information to new investors, including the fact that they had never purchased or activated mining machines for some previous investors.
The SEC claims that Geosyn, a Texas-based Bitcoin mining company, unlawfully sold securities without proper registration, misleading investors with false promises and withholding crucial information. The lawsuit alleges that Geosyn didn’t follow through on its promises to buy or activate mining machines as it had told previous investors.
Furthermore, Geosyn is accused of misrepresenting its services, such as offering tailored crypto-mining strategies and monitoring of mining machines. Ward and McNutt are said to have used approximately $1.2 million for personal expenses and paid around $354,500 to investors as supposed returns from mining activities, despite financial struggles.
Internal messages between the defendants supposedly revealed the need to buy Bitcoin to fund these payments. By the end of 2022, Geosyn faced financial difficulties, having minimal funds available and unable to fulfill its commitments to investors due to the absence of favorable electricity contracts.
McNutt’s departure in October 2022 left Ward in charge, who allegedly failed to disclose his own misappropriations while reporting McNutt for embezzlement. With Geosyn’s financial situation deteriorating in early 2023, Ward resorted to issuing “IOU” notes to investors for owed Bitcoin.
Despite announcing plans to file for bankruptcy in June, the company never went through with it, according to the SEC’s allegations. The SEC is seeking permanent injunctive relief,repayment of funds , civil penalties, and any other necessary equitable relief
