SEC filed a lawsuit against the mining company Geosyn Mining and its two co-founders, accusing them of an unregistered and fraudulent securities offering.
The regulator claims that the firm, along with Caleb Ward (CEO) and Jeremy McNatt (COO), raised approximately $5.6 million from more than 60 investors between November 2021 and December 2022.
The defendants allegedly promised to acquire, maintain, and operate cryptocurrency mining rigs, including those for bitcoin. The mined digital assets were to be distributed as investment returns.
According to the SEC, the defendants:
- falsely claimed that Geosyn had contracts for low-rate electricity supply;
- concealed from investors that they never purchased mining equipment or connected it to the network;
- failed to provide promised services such as personalized mining strategy options and 24/7 operation monitoring.
The Commission reports that Ward and McNatt unlawfully appropriated $1.2 million of the raised funds for personal use.
Approximately $354,000 was paid to investors purportedly as profit distribution, although the company seemingly never generated such profits, the SEC emphasized.
The lawsuit filed in the Northern District of Texas accuses the defendants of violating federal securities laws related to fraud prevention and registration.
The Commission seeks to bar Ward and McNatt from conducting business and holding executive positions, as well as to secure restitution and civil penalties.
Earlier in 2023, the number of SEC lawsuits against crypto companies increased by 50% to a record 46.