The U.S. Securities and Exchange Commission (SEC) has initiated legal action against Geosyn Mining and its co-founders, alleging they swindled investors out of $5.6 million by misleading them about the company's crypto mining operations and misusing customer funds for personal expenses.
According to the SEC's lawsuit filed in federal court in Fort Worth, Texas, Geosyn, along with its CEO Caleb Joseph Ward and former operating CEO Jeremy George McNutt, deceived approximately 64 investors between November 2021 and December 2022. The alleged fraud involved selling service agreements as securities, promising to purchase and operate cryptocurrency mining rigs on behalf of customers.
The SEC asserts that Geosyn and its executives falsely represented the company's energy costs to investors, claiming to have cheap electricity contracts when, in reality, costs were significantly higher. Furthermore, the lawsuit alleges that Geosyn failed to fulfill its commitments to purchase and operate mining rigs as agreed upon, resulting in investors not receiving the returns promised.
Ward and McNutt are accused of fabricating claims about Geosyn's mining operations to deceive investors. Despite promising investors the flexibility to mine various cryptocurrencies, the company reportedly limited operations to Bitcoin mining. The SEC alleges that Geosyn falsified documents to create the illusion of mining profitability and productivity, even though rigs were not operational.
Additionally, the SEC claims that Ward and McNutt misappropriated a substantial portion of investor funds for personal expenses, including extravagant purchases such as restaurant outings, vacations, and luxury items. The misuse of funds also allegedly extended to covering legal expenses and unrelated incidents, such as breathalyzer equipment and costs related to arrests for drunk driving.
As Geosyn's financial situation deteriorated by the end of 2022, the company was unable to sustain operations due to misrepresented power contracts and a lack of profitability. McNutt exited the company in October 2022, leaving it in dire financial straits. Ward, on the other hand, reportedly attempted to shift blame by reporting McNutt's misconduct to authorities without disclosing his own misappropriation of funds. Despite Ward's promises of bankruptcy filings in early 2023, no such action was taken, leaving investors with unpaid debts and unresolved financial obligations. The SEC is seeking permanent bans, restitution of misappropriated funds, and fines against the accused individuals.
