SEC Charges Fraudulent Bitcoin Miners – GAW and ZenMiner

Homero Joshua Garza has been charged by the Securities and Exchange Commission with committing fraud through his Connecticut-based companies, GAW Miners and ZenMiner, by undertaking a Ponzi scheme to pay returns to investors from new capital from new investors.

Garza offered investors shares in the company, which was supposed to make profit by mining bitcoin. Insufficient mining power was owned by the companies and as such they were unable to deliver on their promises: they did not have the required computing power. To fulfill at least some of the obligations his companies had made, Garza diverted funds from investors to pay off other investors.

Grievances stand that Garza sold $20 million worth of ‘hashlet’ shares to over 10,000 people, many of whom did not see the promised returns; that the computing power to run the operations was not sufficient and therefore the companies misrepresented their potential. Restitution is being sought by the SEC in addition to permanent injunctive relief.

Paul G. Levenson, Director of the SEC’s Boston Regional Office, stated: “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,”