SEC alleges bitcoin investment was Ponzi scheme

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The Securities and Exchange Commission charged dual bitcoin mining companies and their owner on Tuesday with defrauding investors.

The SEC’s censure accuses Garza and his firms of using a Ponzi intrigue that used “mining” for bitcoin or other practical currencies as a front to take financier funds. “Mining” means requesting mechanism energy to try to solve formidable equations. The initial mechanism or collection of computers to solve an equation earns a bitcoin currency.

From Aug to Dec 2014, the SEC alleges in a censure Homero Joshua Garza sole $20 million value of shares in a digital mining agreement he called a Hashlet by his digital bitcoin mining companies GAW Miners and ZenMiner. But those companies did not possess adequate computing energy to solve a problems. Garza and his companies sole distant some-more computing energy than they owned, so some investors perceived deduction generated from sales to other investors.

“Garza and his companies cloaked their intrigue in technological sophistication and jargon, though a rascal was elementary during a core: they sole what they did not own, skewed what they were selling, and attacked one financier to compensate another,” pronounced Paul G. Levenson, executive of a SEC’s Boston Regional Office, in

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