The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Geosyn Mining and its founders, Caleb Joseph Ward and Jeremy George McNutt, for defrauding investors of $5.6 million. The SEC alleges that the company misrepresented its crypto-mining operations, falsely claiming to have cheap electricity contracts and failing to purchase the mining equipment promised to investors.
According to a filing on April 24, the SEC brought the case against Geosyn in a Texas federal court, accusing the company of raising $5.6 million from over 60 investors from November 2021 to December 2022. The SEC argues that Geosyn misled investors with a plan to purchase, maintain, and operate cryptocurrency mining equipment while sharing profits from mined cryptocurrencies such as Bitcoin for a fee.
The SEC’s complaint highlights that Geosyn misrepresented its contracts with power suppliers and failed to acquire several promised mining machines. The SEC claims that the company’s promises to clients were deceptive, and the real electricity costs were 40-50% higher than projected.
The SEC states that Geosyn misled investors by issuing Bitcoin payments to create an impression of operational mining equipment and profits, even when the equipment wasn’t functioning. The company allegedly provided counterfeit documents that fabricated mining productivity and profits.
Geosyn reportedly earned $320,000 from Bitcoin mining but paid out nearly $354,500 to investors, with McNutt covering the shortfall, which was then passed on to the investors by Ward. Additionally, the SEC claims that Ward and McNutt misused approximately $1.2 million of investors’ funds for personal expenses, including dining, nightlife, vacations, firearms, watches, and legal fees.
The SEC seeks permanent injunctions, the return of ill-gotten gains with interest before judgment, and monetary penalties against both Ward and McNutt.