SEC Sues Bitcoin Mining Company GAW Miners

In the early morning of December 2nd, Beijing time, the U.S. Securities and Exchange Commission (SEC) sued two Bitcoin companies and their founders for using virtual currency as bait to get rich quickly and deceive investors into joining, which was determined to constitute a Ponzi scheme.

According to the complaint filed by the SEC with the Connecticut Federal Court, the agency accused Homero Joshua Garza of engaging in fraudulent activities through his Bitcoin companies GAW Miners and ZenMiner, claiming to provide cloud mining computing power that can sustainably make profits. However, the reality is that GAW Miners and ZenMiner do not have enough mining computing power, so most investors pay for the computing power shares of these two companies, which do not actually correspond to the computing power they should have. The returns paid by the two companies to some investors are precisely from the investment of other investors, which is what we often call "拆东墙，补西墙."

“As we allege, Garza and his firm hid their fraudulent scheme in technical sophistication and jargon, but at its core, it was simple: They sold something that didn’t actually exist, essentially robbing investors to pay other investors,” said Paul G. Levenson, director of the SEC’s Boston Regional Office.

According to the SEC’s complaint:

From August to December 2014, Garza and his company sold 2000万美元worth of cloud mining contracts, which they called Hashlet .

More than 10,000 investors bought Hashlet contracts, which were touted as always profitable and never outdated.

Investors were misled into believing that they would receive ongoing Bitcoin mining income after purchasing these contracts, when in reality GAW Miners had little or no mining power.

Because Garza and his company sold far more computing power than they actually owned, they were unable to deliver on the returns they had promised to investors.

In the end, most Hashlet investors lost most of their money, and only a few made a profit.

The SEC will seek to have Garza disgorge ill-gotten gains and pay interest on civil damages, and the agency is seeking a jury trial, the people said.

Original text: http://www.sec.gov/news/pressrelease/2015-271.html
Author:sec
Compiled by: Satuoxi
Editor: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/sec-gaw)