The Securities and Exchange Commission (SEC) has put a hold on its lawsuit against Geosyn Mining, a cryptocurrency mining firm, as federal prosecutors have brought similar fraud charges against the company’s top executives. This decision follows the recent court appearances of Geosyn CEO Caleb Joseph Ward and former operating chief Jeremy George McNutt.
Charges filed on February 5 and later unsealed reveal that Ward, McNutt, and another former employee, Jared McNutt, allegedly deceived customers by claiming they would purchase and host Bitcoin (BTC) mining rigs for a monthly fee, entitling customers to a share of the mined BTC. Instead, the complaint alleges that the executives failed to deliver on these promises, utilizing client funds for personal luxuries instead.
The prosecutors detailed how the three misappropriated client funds on extravagant purchases, including firearms, luxury watches, and family vacations. Claims suggest that they misled clients by sending fabricated reports indicating their mining operations were profitable. In a troubling twist, they reportedly used money from new clients, which was believed to be allocated for purchasing miners, to buy Bitcoin and redistribute it to earlier clients without their knowledge.
Furthermore, it was claimed that the executives misrepresented the costs of the machines to extract additional profits and maintained dual spreadsheets recording both the actual and inflated prices of the mining rigs. The SEC’s lawsuit indicates that Ward and McNutt defrauded approximately 64 investors, totaling around $5.6 million during the 14-month period.
Recently, in response to inquiries from the court regarding regulatory shifts under new leadership, Ward and McNutt have requested a delay on the SEC’s case, citing possible impacts from the previous administration’s more lenient stance on cryptocurrency regulation. Despite these developments, the SEC has maintained that the current proceedings are separate from broader crypto regulatory issues.
