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SEC Charges Crypto Asset Mining and Hosting Company and Its Co-Founders With Fraud

The U.S. Securities and Exchange Commission filed charges against Geosyn Mining LLC, a Fort Worth, Texas-based crypto asset mining and hosting company, as well as its co-founders, Caleb Ward and Jeremy McNutt, for engaging in an unregistered and fraudulent securities offering.

The SEC’s complaint alleges that between November 2021 and December 2022, Geosyn; Ward, chief executive officer; and McNutt, former-chief operating officer; raised approximately $5.6 million from more than 60 investors. According to the complaint, Geosyn told investors it would purchase, maintain, and operate crypto asset mining machines and then distribute mined crypto assets, such as bitcoin, to the investors for a fee.

The SEC complaint further alleges, however, that the defendants falsely claimed that Geosyn had favorable contracts with electricity providers which enabled Geosyn to operate the mining machines profitably; failed to disclose to new investors that the defendants never purchased mining machines (or brought mining machines online) for some of the previous investors; and failed to disclose that Geosyn was not providing the services that it claimed to provide in its offering documents, such as allowing investors to personalize their crypto asset mining strategy or providing 24/7 onsite monitoring of the mining machines.

Ward, age 40, and McNutt, age 35, allegedly misappropriated about $1.2 million of the investor funds raised for personal use and paid approximately $354,500 to investors as purported profit distributions even though Geosyn appears to have never operated profitably.

Filed in U.S. District Court for the Northern District of Texas, the SEC complaint charges the defendants with violating the antifraud and securities-registration provisions of the federal securities laws. It seeks permanent injunctions against all defendants, and officer-and-director bars, disgorgement with prejudgment interest, and civil penalties against Ward and McNutt.

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