The US Securities and Exchange Commission charged controversial cryptocurrency entrepreneur Josh Garza and two of his companies, GAW Miner and ZenMiner, with running a Ponzi scheme to defraud people.
The SEC announced charges today, accusing Garza of using unfamiliar jargon to trick people into buying into a fraud:
“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,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office.
This is no surprise to anyone following Garza’s herky-jerk movements through the crypto community. (I wrote about the extensive allegations against him back in April.) He quickly moved from peddling convoluted Bitcoin mining hardware and software with GAW Miners and ZenMiners to launching his own alternative cryptocurrency, Paycoin, which was frequently criticised as a pump-and-dump.
One of the most messed-up incidents: In a complaint full of charade after charade, the SEC accuses Garza of suckering people into buying 9/11-themed cyrptocurrency tools, claiming that his company wouldn’t profit off of it… which it did:
For example, on or about September 11, 2014, GAW Miners announced the creation of the limited edition “Remember” Hashlet with the logo of “9/11” to commemorate those whose lives were lost in the terrorist attacks of September 11, 2001. Garza announced that GAW Miners would only sell 500 Remember Hashlets, and would donate all of the proceeds (approximately $10,000) to “the 9/11 memorial fund.” He specified that “GAW will in no way be profiting from any sales related to the cause.” After selling approximately 2,290 Remember Hashlets for a total of approximately $48,000, GAW Miners donated only $10,000 to a 9/11 related charity. Garza knew or should have known that GAW Miners actually profited from the sale of Remember Hashlets, contrary to his representations.
The SEC is calling for “injunctive relief”, which means that Garza has to stop swindling, as well as a monetary penalty and a “disgorgement of ill-gotten gains,” which means exactly what it sounds like: It wants to dismantle a fortune built on selling non-existent money-making tools.
[SEC]
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