Huge news from SEC: finally PayCoin scammer Josh Garza has been charged with fraud, along with his companies GAW Miners and ZenMiner. The SEC press release is here: https://www.sec.gov/news/pressrelease/2015-271.html
From the complaint:
ACCORDING TO THE SEC’S COMPLAINT:
FROM AUGUST 2014 TO DECEMBER 2014, GARZA AND HIS COMPANIES SOLD $20 MILLION WORTH OF PURPORTED SHARES IN A DIGITAL MINING CONTRACT THEY CALLED A HASHLET.
MORE THAN 10,000 INVESTORS PURCHASED HASHLETS, WHICH WERE TOUTED AS ALWAYS PROFITABLE AND NEVER OBSOLETE.
ALTHOUGH HASHLETS WERE DEPICTED IN GAW MINERS’ MARKETING MATERIALS AS A PHYSICAL PRODUCT OR PIECE OF MINING HARDWARE, THE PROMISED CONTRACT PURPORTEDLY ENTITLED THE INVESTOR TO CONTROL A SHARE OF COMPUTING POWER THAT GAW MINERS CLAIMED TO OWN AND OPERATE.
INVESTORS WERE MISLED TO BELIEVE THEY WOULD SHARE IN RETURNS EARNED BY THE BITCOIN MINING ACTIVITIES WHEN IN REALITY GAW MINERS DIRECTED LITTLE OR NO COMPUTING POWER TOWARD ANY MINING ACTIVITY.
BECAUSE GARZA AND HIS COMPANIES SOLD FAR MORE COMPUTING POWER THAN THEY OWNED, THEY OWED INVESTORS A DAILY RETURN THAT WAS LARGER THAN ANY ACTUAL RETURN THEY WERE MAKING ON THEIR LIMITED MINING OPERATIONS.
THEREFORE, INVESTORS WERE SIMPLY PAID BACK GRADUALLY OVER TIME UNDER THE MANTRA OF “RETURNS” OUT OF FUNDS THAT GARZA AND HIS COMPANIES COLLECTED FROM OTHER INVESTORS.
MOST HASHLET INVESTORS NEVER RECOVERED THE FULL AMOUNT OF THEIR INVESTMENTS, AND FEW MADE A PROFIT.
This is long overdue. Garza is a notorious scammer in the Bitcoin community and it's nice to see the SEC actually doing its job.
