- The SEC recently unveiled legal action against Geosyn Mining, alleging misappropriation of $1.2 million from customer funds
- Caleb Ward and Jeremy McNutt, Geosyn’s co-founders, are accused of conducting an “unregistered and fraudulent securities offering”
- Geosyn amassed over $5 million from investors but concealed the fate of their investment, facilitating the misappropriation of funds
The Securities and Exchange Commission (SEC) recently unveiled legal action against crypto-mining outfit Geosyn Mining, alleging that the company and its founders misappropriated $1.2 million of customer funds. The SEC alleges that co-founders Caleb Ward and Jeremy McNutt conducted an “unregistered and fraudulent securities offering.” Geosyn accrued more than $5 million from investors but took steps to hide the fate of their investment, allowing them to misappropriate a portion of it.
$5.6 Million Received From Investors
According to the complaint filed by the SEC on Friday, Geosyn, led by CEO Ward and then-COO McNutt, amassed roughly $5.6 million from over 60 investors between November 2021 and December 2022. Geosyn promised to procure, manage, and operate crypto asset mining machines and subsequently distribute mined cryptocurrencies to investors for a fee.
However, the SEC alleged that Geosyn misled its investors on several fronts, claiming that the company falsely asserted having advantageous contracts with electricity providers, enabling profitable operation of the mining machines. Moreover, Geosyn purportedly failed to disclose to new investors that they hadn’t procured mining machines for some prior investors or commenced mining operations for them.
When ‘Mine’ Isn’t Yours
The complaint also accuses Geosyn of not fulfilling services promised in its offering documents, such as allowing investors to customize their crypto asset mining strategies or providing round-the-clock onsite monitoring of mining machines.
Further scrutiny revealed that out of the funds raised from investors, Ward and McNutt allegedly diverted about $1.2 million for personal expenses and disbursed around $354,500 to investors as profit distributions despite Geosyn’s apparent lack of profitability.
The SEC’s legal action accuses the defendants of violating antifraud and securities-registration provisions of federal securities laws. It seeks permanent injunctions against Ward and McNutt alongside disgorgement with prejudgment interest and civil penalties specifically against the pair.
