U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25983 / April 24, 2024
Securities and Exchange Commission v. Geosyn Mining, LLC, Caleb Joseph Ward, and Jeremy George McNutt, No. 4:24-cv-00365 (N.D. Tex. filed Apr. 24, 2024)
SEC Charges Crypto Asset Mining and Hosting Company and Its Co-Founders with Fraud
The Securities and Exchange Commission announced today that it filed charges against Geosyn Mining, LLC, a Texas-based crypto asset mining and hosting company, and 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 (Geosyn's CEO), and McNutt (Geosyn's then-COO) raised approximately $5.6 million from more than 60 investors. According to the SEC's 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: (1) falsely claimed that Geosyn had favorable contracts with electricity providers which enabled Geosyn to operate the mining machines profitably; (2) 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 (3) 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. The complaint also alleges that, of the investor funds raised, Ward and McNutt misappropriated about $1.2 million for personal use and paid approximately $354,500 to investors as purported profit distributions even though Geosyn appears to have never operated profitably.
The SEC's complaint, filed in U.S. District Court for the Northern District of Texas (Fort Worth Division), charges the defendants with violating the antifraud and securities-registration provisions of the federal securities laws. The SEC seeks permanent injunctions against all defendants, and officer-and-director bars, disgorgement with prejudgment interest, and civil penalties against Ward and McNutt.
The SEC's investigation was conducted by Robert Boudreau, Ty Martinez, and Jamie Haussecker of the Fort Worth Regional Office and was supervised by Samantha Martin and B. David Fraser. The litigation will be led by Jennifer D. Reece and supervised by Keefe Bernstein.