The SEC has filed a lawsuit against Geosyn Mining and its executives for allegedly defrauding investors of $5.6 million by misrepresenting their Bitcoin mining operations and misusing funds for extravagant personal expenses.
The U.S. Securities and Exchange Commission (SEC) has initiated legal action against Geosyn Mining and its top executives, alleging fraudulent activities that reportedly swindled investors out of $5.6 million. The lawsuit, filed on April 24 in Fort Worth, Texas, accuses Geosyn, its CEO Caleb Joseph Ward, and former operating chief Jeremy George McNutt of deceiving over 64 investors through misleading service agreements sold as securities from November 2021 to December 2022.
The SEC's complaint details that Geosyn and its founders misrepresented the extent of their Bitcoin mining operations, including the number of rigs and profitability, and misappropriated funds for personal use. Investors were led to believe they were purchasing service agreements to run Bitcoin miners, with Geosyn claiming to have favorable contracts with electricity providers. Contrary to these claims, the SEC maintains that energy costs were "as high as 40-50% above" the rates promised to investors.
According to the SEC, Geosyn failed to fulfill its promises to investors, including the purchase of 1,400 mining rigs, falling short by at least 400 rigs, with many not even being operational. The SEC alleges that Geosyn created bogus documents to falsify mining production rates and profits and made Bitcoin payouts to investors to simulate the appearance of profitable operations. Despite earning only $320,000 from actual Bitcoin mining, the firm distributed approximately $354,500 worth to investors, misrepresenting the success of their investments.
Further allegations include that Ward and McNutt diverted roughly $1.2 million of investor funds for personal expenses, including extravagant meals, nightclub events, vacations, firearms, timepieces, and legal fees. Noteworthy expenditures cited in the filing involve a $20,000 Las Vegas nightclub wedding celebration for Ward and a $49,000 family trip to Disney World. Another $22,000 was reportedly spent on a breathalyzer device and related expenses following arrests and convictions for driving under the influence at a conference in June 2022.
Background information reveals that McNutt relinquished his ownership and left Geosyn in October 2022. Subsequently, in December, Ward reported McNutt to authorities for embezzlement while concealing his own misappropriations. Facing financial difficulties in 2023, Ward issued "IOU" notes to investors for their owed Bitcoin, falsely claiming that Geosyn would file for bankruptcy, an event that never transpired.
The SEC's lawsuit seeks a permanent injunction against the defendants, repayment of the misappropriated funds, and additional penalties. As of the filing, Geosyn, Ward, and McNutt had not provided any comments on the allegations.
