SEC Officially Indicts GAW Miners CEO for ‘Hashlet’ Ponzi Scheme

Posted by Jamie Redman on

WASHINGTON D.C. — Homero Joshua Garza was brought up on civil charges for the alleged operation of a “Ponzi Scheme” by the U.S. Securities and Exchange Commission (SEC). Garza and associated companies GAW Miners and ZenMiner, are being tried in court for selling $20 million USD worth of a cloud mined product called “hashlets.” The SEC alleges that Garza initiated conspired fraud with these “hash-shares” and was also involved with a series of other plotted events. Paul G. Levenson, Director of the SEC’s Boston Regional Office assigned to the case, states:

“As alleged in our complaint, Garza and his companies cloaked their scheme in technological sophistication and jargon, but the fraud was simple at its core: they sold what they did not own, misrepresented what they were selling, and robbed one investor to pay another.”

Also read: Building On-Ramps for the Bitcoin Ecosystem

Joshua-Garza-Car1

Garza and associates have been under suspicion from the Bitcoin community at large in the past. Since the introduction of GAW’s “hashlet” program, and the following events with the big Paycoin fiasco, Garza was under intense scrutiny. These schemes led to his possible hiding in Dubai, to which he claims his actions were bolstered by threats from gangsters. Back in August 2015 Garza’s brother Carlos was sent a subpoena with similar concerns about GAW operations. Rumors and headlines of what Garza was doing to the crypto-community with these scams had flooded the cryptocurrency media throughout the past year, but no charges were held against the alleged crypto-grifter until now.

83f575392245ee1e78e7c04ac16ac726The current lawsuit wants Garza to pay back the money to certain partners and accept the liabilities of the civil charges. The SEC complaint will issue a  “permanent injunctive relief as well as the disgorgement of ill-gotten gains plus prejudgment interest and penalties.” The allegations stem from a series of twists and turns throughout Garza’s career. With the introduction of the GAW Miners operation that moved into the cloud territory after reselling “used miners,” the company started off on a slippery slope. These suspected activities continued to raise eyebrows as Garza introduced his altcoin Paycoin that also included cloud services. In the end, the mining operation CEO allegedly sold 41% of GAW operations to the current owner of a firm called Cantor Fitzgerald. Many investors online reported to be duped by these mining operations and his altcoin promises. The SEC complaint explains:

“Defendants’ Hashlet sales had many of the hallmarks of a Ponzi scheme. Because defendants sold far more computing power than they owned and dedicated to virtual currency mining, they owed investors a daily return that was larger than any actual return they were making on their limited mining operations.”

xpyflogoblack1The SEC complaint indicates that from August 2014 to December 2014 investors were misled and sold thousands of “hashlets.” The report claims that GAW itself had little to no mining activity within its operations throughout this period of time. In the end, SEC representatives say that while Garza “oversold” a product that would never return on investment, he continued to collect from investors. Paycoin, Hashstakers and ZenMiner operations were also mentioned within the SEC statement. Garza and associates have yet to respond to any media requests.

Bitcoin.com will be sure to keep our readers informed as the case develops further.

What do you think of the SEC complaint against Josh Garza? Let us know in the comments below!


Images courtesy of Pixbay, and Bitcointalk.org forums, and reddit forums

 

The post SEC Officially Indicts GAW Miners CEO for ‘Hashlet’ Ponzi Scheme appeared first on Bitcoin News.


Share this post



← Older Post Newer Post →


Leave a comment