On Wednesday, the Securities and Exchange Commission sued the founder of a now-shuttered Bitcoin mining company, alleging that it committed $19 million worth of fraud in a Ponzi scheme.
According to the SEC’s civil complaint, Homero Joshua Garza and his companies, GAW Miners and ZenMiner, 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.”
Between August and December 2014, the companies sold $19 million worth of these contracts, dubbed “Hashlets.”
Defendants’ Hashlet sales had many of the hallmarks of a Ponzi scheme. Because defendants sold far more computing power than they owned and dedicated to virtual currency mining, they owed investors a daily return that was larger