PANews reported on April 26 that, according to Cointelegraph, U.S. securities regulators filed a lawsuit against Geosyn Mining and its co-founders, accusing them of defrauding investors of $5.6 million by misrepresenting the number of Crypto Assets Mining Rig they operated, while misappropriating customer funds for personal consumption. The U.S. SEC Corporation (SEC) filed a lawsuit in federal court in Fort Worth, Texas, on April 24, alleging that Geosyn, its CEO Caleb Joseph Ward, and former head of operations, Jeremy George McNutt, defrauded about 64 investors between November 2021 and December 2022 through a service protocol as a sale of securities.
The SEC alleges that the protocol who paid to buy and run the Crypto Assets Mining Rig on behalf of their customers "falsely claimed" that Geosyn had a cheap energy contract with a power supplier, when in reality the cost was "up to 40-50 percent" higher than the rates they had told its customers, and that they also lied to investors about Geosyn's operations, which had contracted a service protocol to purchase 1,400 Mining Rig, but failed to purchase 400 of them, and " Never bring longest purchased mining rigs online"; Protocol to Geosyn's protocol, which told investors that they could choose the Crypto Assets they wanted to mine, the company refused to mine requests for any other Crypto Assets other than Bitcoin; the company paid investors Bitcoin proceeds to make them "believe that their mining rigs are running and profitable, when they are not" and produced "fake documents" containing "fabricated mining productivity and profits"; the duo embezzled about $1.2 million of investor funds for personal consumption such as dining, nightclubs, vacations, Firearms, watches, and legal fees, among others. The SEC also said the duo also used other $22,000 in investor funds to purchase breath testing equipment, as well as expenses related to the arrest and conviction of the duo and Geosyn employees for drunk driving during the June 2022 Crypto Assets conference.