The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Geosyn Mining and its co-founders, alleging fraudulent activities that resulted in investors losing $5.6 million. Here’s a breakdown of the allegations:
The SEC lawsuit, filed on April 24 in a federal court in Fort Worth, Texas, accuses Geosyn, CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt of deceiving approximately 64 investors between November 2021 and December 2022. They allegedly misrepresented the number of crypto mining rigs operated by Geosyn while misusing customer funds for personal expenses.
Geosyn sold service agreements to investors as securities, promising to purchase and operate crypto miners on their behalf for a fee. However, the SEC claims that these agreements falsely represented Geosyn’s contracts with electricity providers for cheap energy. In reality, the energy costs were significantly higher than what was disclosed to customers.
Out of the 1,400 mining rigs Geosyn agreed to purchase, it failed to acquire 400 of them and did not activate most of the purchased mining machines. Despite promising investors the ability to choose which cryptocurrency to mine, Geosyn only mined Bitcoin and falsely represented mining operations as profitable.
The SEC alleges that Ward and McNutt misused approximately $1.2 million in investor funds for personal expenses, including meals, nightclubs, vacations, firearms, watches, and legal fees. They also used investor money to cover expenses related to separate arrests and convictions for drunk driving.
By the end of 2022, Geosyn faced financial difficulties due to the lack of favorable electricity contracts and dwindling investor funds. Despite this, Ward reportedly failed to disclose the company’s financial situation accurately and even accused McNutt of embezzlement without revealing his own misappropriations.
In early 2023, Ward emailed investors “IOU” notes for their owed Bitcoin and announced plans for bankruptcy in June. However, the bankruptcy filing never materialized.
The SEC is seeking a permanent injunction, repayment of misappropriated funds, and penalties against Geosyn, Ward, and McNutt.
Response from Geosyn, Ward, and McNutt
At the time of reporting, Geosyn, Ward, and McNutt were not immediately available for comment.
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