Geosyn, along with its CEO Caleb Joseph Ward & former operating chief Jeremy George McNutt, have been sued by the SEC for allegedly defrauding 64 investors.
The United States Securities and Exchange Commission (SEC) has accused Geosyn Mining and its co-founders of deceiving investors. The case is about the number of crypto mining rigs it operated. Moreover, using client funds for personal expenses resulted in a loss of $5.6 Million.
SEC’s Allegations
McNutt used the company’s credit card for personal expenses, including a $20,000 nightclub celebration for a wedding. Moreover, according to the SEC, a $49,000 family vacation to Disney World, among others.
Additionally, the regulator claims that Ward and McNutt spent a further $22,000 of investor funds on a breathalyzer device. The other expenses are related to their separate arrests and convictions for drunk driving during a crypto conference in 2022.
According to the April 24 lawsuit, Geosyn, its CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt allegedly defrauded approximately 64 investors between November 2021 and December 2022 by selling service agreements as securities.
Secretive Costs by Geosyn
SEC claimed that the agreements, which allowed customers to operate crypto miners on their behalf for a fee, had loopholes. It was falsely claimed that Geosyn had contracts with electricity providers for low-cost energy. However, the costs were “as high as 40-50% above” what the company told customers.
Furthermore, Ward and McNutt are accused of deceiving investors about Geosyn’s operations. They are charged by claiming that the company had entered into service agreements to purchase 1,400 mining rigs. However, it had failed to buy 400 of them and “never brought most of the purchased mining machines online.”
The SEC alleges that Geosyn rejected investors’ requests to mine anything besides Bitcoin. Despite its agreements stating that clients could select the crypto they wanted to mine.
What Geosyn Did To Cover Up
The company allegedly made BTC payouts and created “bogus documents” with “fabricated mining production rates and profits to make investors believe that their mining machines were operational and profitable.” It misappropriated approximately $1.2 Million in investor funds for personal use, including meals, nightclubs, vacations, guns, watches, and legal fees.
Geosyn’s new investor funds dried up by the end of 2022, and the company had less than $1,900 in the bank. It lacked the favorable electricity contracts that its co-founders had touted to investors.
McNutt left the company in October 2022 and relinquished ownership. Meanwhile, Ward allegedly reported McNutt for embezzlement without disclosing his misappropriations.
Summary
The SEC has accused Geosyn Mining and its co-founders of deceiving investors by selling service agreements as securities. The company allegedly made BTC payouts and fabricated documents. It did so to make investors believe that their mining machines were operational and profitable.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of financial loss.
