As a researcher with a background in finance and securities law, I find the SEC’s allegations against Geosyn Mining and its founders, Caleb Joseph Ward and Jeremy George McNutt, to be deeply concerning. The scale of the alleged fraud – over $5.6 million – and the blatant misrepresentations made to investors are disturbing.
On Wednesday, April 24, the US Securities and Exchange Commission (SEC) brought charges against Geosyn Mining for defrauding over 64 investors, totaling $5.6 million in losses. According to the SEC complaint, Geosyn and its leaders deceitfully represented their crypto mining rigs’ operations while using investor funds for personal expenditures.
In a federal court case in Fort Worth, Texas, the SEC has filed a lawsuit against Geosyn, its CEO Caleb Joseph Ward, and Jeremy George McNutt, its former operating chief. The SEC alleges that these individuals sold service agreements as securities between November 2021 and December 2022.
As an analyst examining the SEC’s lawsuit against Geosyn, I’d rephrase the passage this way: In the legal complaint, it is stated that I, Geosyn, misrepresented the existence of contracts for purchasing and managing cryptocurrency miners on behalf of our clients. Furthermore, we allegedly secured favorable electricity rates from providers. However, the actual costs were significantly higher – reaching approximately 40-50% above the figures communicated to our customers.
Additionally, as per the SEC’s allegations, Warn and McNutt, the co-founders of Geosyn, misrepresented the company’s operations to investors. They initially promised to acquire 1,400 mining rigs for customers but were unable to purchase 400 of them. Moreover, most of the mining machines that were bought were never activated.
According to Geosyn’s contracts, clients were given the freedom to select which cryptocurrency they wanted to mine. However, the company subsequently refused to mine any cryptocurrency other than Bitcoin.
The SEC claimed that the crypto miner created “bogus documents” with “fabricated mining rates and profits”. It also made BTC payouts to investors making them “believe that their mining machines were operational and profitable when they were not”. Although Geosyn earned only $320,000 from Bitcoin mining, it gave around $354,500 worth to investors.
Geosyn Founders Used Customers’ Funds for Personal Use
The SEC alleges that Ward and McNutt are accused of taking around $1.2 million from investors’ funds for their own personal expenses. These expenses included meals at expensive restaurants, nights out at nightclubs, vacations, buying firearms and luxury watches, and paying legal fees. Notable instances mentioned are McNutt’s reported use of the company’s credit card for a $20,000 “Las Vegas wedding celebration” for Ward and a $49,000 family trip to Disney World.
It’s also alleged that Ward and McNutt utilized $22,000 from investor funds towards a breathalyzer machine and other related expenses concerning McNutt and a Geosyn employee’s legal issues arising from DUI charges during the crypto conference in June 2022.
In October 2022, I, as an analyst, observed that McNutt departed from the firm relinquishing his ownership. Subsequently, it came to light that Ward contacted the regulatory authorities to report McNutt for embezzlement without revealing his own involvement in misappropriations.
In 2023, I found myself in a financially precarious position. Facing mounting debts, I penned down IOUs to my investors regarding their Bitcoin holdings with Geosyn. Contrary to my communication, Geosyn did not file for bankruptcy as reported.
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2024-04-26 13:39