The U.S. Securities and Exchange Commission (SEC) has leveled serious allegations against Geosyn, a Texas-based cryptocurrency mining and hosting company, and its co-founders, Caleb Ward and Jeremy McNutt. The SEC claims that the company and its founders engaged in a $5.6 million fraud scheme, deceiving more than 60 investors. Moreover, Ward and McNutt allegedly misappropriated about $1.2 million for personal use.
According to the SEC’s complaint, Geosyn’s representations of its miner purchases and operations were fraught with falsehoods. From November 2021 to December 2022, the defendants reportedly misled investors to gather approximately $5.6 million in funds. Notably, Geosyn is accused of not disclosing to new investors that those before them had never received the mining machines they were promised, and the company failed to perform the services it outlined in its offering documents.
The SEC further alleges that the company and its co-founders falsely claimed to have lucrative contracts with electricity providers, while in reality, the costs were significantly higher—by 40-50%—than what was presented to the investors. Additionally, the SEC asserts that Ward and McNutt misappropriated $1.2 million of the raised funds for personal use, including family vacations and luxury purchases such as guns and watches.
To cover the operational shortfalls and mismanagement, the SEC states that Geosyn, along with McNutt and Ward, made periodic Bitcoin distributions to investors, giving the illusion of profitability. However, the complaint reveals that while the company raised only about $320,000 from mining activities, it distributed $354,500 in Bitcoin. To manage this shortfall, McNutt allegedly had to purchase Bitcoin personally to meet the distribution commitments.
The situation within Geosyn deteriorated towards the end of 2022. Following accusations of embezzlement by Ward, McNutt resigned and relinquished his ownership interest in the company. In early 2023, Ward reportedly informed investors via email that the owed Bitcoin payments would be delayed.
The SEC is seeking a permanent injunction against the defendants, along with the repayment of the misappropriated funds and additional penalties. The agency emphasizes that each defendant “acted with scienter and engaged in the referenced acts knowingly and/or with severe recklessness,” highlighting the deliberate nature of the fraud.
