The Securities and Exchange Commission (SEC) has taken legal action against Geosyn Mining, a crypto-mining company, alleging that it misappropriated $1.2 million of customer funds. Co-founders Caleb Ward and Jeremy McNutt are accused of conducting an “unregistered and fraudulent securities offering.” Despite accumulating over $5 million from investors, Geosyn allegedly concealed the fate of their investment, allowing for the misappropriation of funds.
Between November 2021 and December 2022, Geosyn received approximately $5.6 million from more than 60 investors. The company promised to manage and operate crypto asset mining machines and distribute mined cryptocurrencies to investors for a fee.
However, the SEC claims that Geosyn misled investors by falsely asserting advantageous contracts with electricity providers for profitable mining operations. Additionally, they allegedly failed to disclose to new investors that they hadn’t fulfilled commitments to prior investors or started mining operations for them.
Geosyn Founders Accused of Misappropriating $1.2 Million (Credits: X)
The SEC’s complaint accuses Geosyn of not delivering promised services outlined in its offering documents, such as allowing investors to customize their mining strategies and providing round-the-clock onsite monitoring of mining machines. Investigation revealed that Ward and McNutt allegedly diverted around $1.2 million for personal expenses and distributed $354,500 to investors as profit distributions despite the company’s lack of profitability.
The legal action seeks permanent injunctions against Ward and McNutt, disgorgement of funds with prejudgment interest, and civil penalties specifically targeting the accused pair. The SEC alleges violations of antifraud and securities-registration provisions of federal securities laws, reflecting a stringent stance on fraudulent activities in the cryptocurrency sector. Geosyn’s case underscores regulatory scrutiny in an evolving industry where investor protection is paramount.
