SEC sues Bitcoin mining firm Geosyn over unregistered $5.6m securities offering

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As a researcher with a background in financial regulation and securities law, I find the SEC’s lawsuit against Geosyn Mining and its founders, Caleb Joseph Ward and Jeremy George McNutt, deeply concerning. The allegations of an unregistered and fraudulent securities offering raise red flags, especially given the sizeable amount of funds raised from unsuspecting investors.

The Securities and Exchange Commission (SEC) has filed a lawsuit against Bitcoin mining company Geosyn, charging it with conducting an unlawful sale of securities. The company reportedly raised more than $5.6 million through misleading tactics.

The SEC, or Securities and Exchange Commission in the United States, has initiated a legal action against Geosyn Mining, a Bitcoin mining company based in Texas, as well as its co-founders Caleb Joseph Ward and Jeremy George McNutt. The charges allege that they engaged in an unlawful and misleading sale of securities.

From November 2021 to December 2022, approximately 64 investors are stated to have contributed over $5.6 million to the defendants through the purchasing of investment contracts, as indicated in the lawsuit.

During their fundraising efforts, the Defendants made false claims about Geosyn’s advantageous deals with electricity suppliers. They asserted these agreements allowed Geosyn to run its crypto asset mining equipment at a profitable rate.

The U.S. Securities and Exchange Commission

The SEC alleges that the defendants did not provide necessary information to recent investors about their past actions. Specifically, they claim that the defendants never bought or activated mining machines for certain earlier investors.

The financial regulatory authority holds the view that Geosyn concealed the fact that they were not delivering the promised services in their prospectus. Specifically, they did not offer customized crypto mining plans nor ensured continuous surveillance of mining equipment as declared.

According to the lawsuit, it is claimed that Ward and McNutt allegedly misused around $1.2 million for personal expenses. Additionally, they reportedly made payments worth approximately $354,500 to investors, representing supposed distributions from mining operations. However, internal communications between the defendants suggest that these distributions might not have been derived from mining activities as stated, but rather required purchasing Bitcoin in order to be fully funded, according to the SEC’s allegations.

As a researcher examining this situation, I can tell you that the Securities and Exchange Commission (SEC) has levied allegations against Geosyn and its founding team for infringing upon federal securities laws, specifically in relation to antifraud and registration provisions. The SEC is requesting the court to grant “permanent injunctive relief,” which means a permanent ban on any further violations of these laws. Additionally, they are seeking “disgorgement of ill-gotten gains with prejudgment interest,” meaning that any profits gained through illegal activities must be returned, along with interest earned prior to the judgment. Furthermore, the SEC is requesting “civil penalties” as part of their relief, which are fines paid to the SEC for each violation. Lastly, they are asking the court to grant any other equitable relief it deems necessary.

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2024-04-26 11:03