GAW Miners and ZenMiner’s founder Homero Joshua Garza is being sued by the Securities and Exchange Commission. The SEC filed a civil complaint alleging that the Bitcoin mining companies run by Garza and his brother, Carlos Garza, committed $19 million worth of fraud in a Ponzi scheme.
According to the Securities and Exchange Commission believes Garza sold more than 10,000 “investment contracts representing shares in the profits they claimed would be generated from using their purported computing power to ‘mine’ for virtual currency.” In its civil complaint, the SEC requests that the companies’ owners and associates return the money that was stolen to investors in addition to civil penalties justified by the “egregious nature of defendants’ violations.”
This is yet another example of alleged criminal behavior associated with companies selling Bitcoin mining hardware. In the past, similar cases were reported in Southern California where a company named Gemcoin was brought to the attention of the Securities and Exchange Commission. But this was not the only case and companies such as CoinTerra, or HashFast were also accused of conducting similar practices.
In a statement, the director of SEC’s Boston Regional Office, Paule G. Levenson said that, “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.”
For months, the Bitcoin community has emitted some serious doubts as to the legitimacy of GAW Miners’ practices and many thought the company may be a scam. In view of the charges faced by the company and its owners, these doubts may have been founded.