The Securities and Exchange Commission (SEC) has temporarily suspended its fraud lawsuit against Geosyn Mining and its executives after federal prosecutors filed similar charges against the company’s leadership.
On February 14, the SEC submitted a request to a Texas federal court, agreeing to put the case on hold. This decision followed the voluntary surrender of Geosyn CEO Caleb Joseph Ward and former operating chief Jeremy George McNutt, who appeared in court the day before.
Allegations of Fraud and Misuse of Funds
An FBI affidavit, unsealed on February 10, alleged that Ward, McNutt, and former sales manager Jared McNutt orchestrated a scheme to defraud customers. While Jared McNutt was not named in the SEC’s suit, prosecutors claim the trio lured customers with promises of Bitcoin mining services.
Clients were led to believe Geosyn would purchase and operate Bitcoin mining rigs on their behalf in exchange for a monthly fee, with earnings from the mined BTC distributed to them. However, prosecutors allege that in many instances, the equipment was never purchased, and customer funds were instead used to finance personal luxuries.
According to court filings, the executives spent money on guns, luxury watches, a family vacation to Disney World, and an extravagant business trip to Miami, where they accumulated significant charges at restaurants and nightclubs using company credit cards.
Fake Reports and Ponzi-Like Practices
The affidavit also details how the trio misled customers by issuing fake reports showing earnings from non-existent mining operations. Additionally, funds from new investors were used to buy Bitcoin and distribute it to earlier clients, a move reminiscent of a Ponzi scheme.
Prosecutors further alleged that the executives manipulated mining rig prices, overcharging clients beyond the stated procurement fees. A spreadsheet allegedly maintained by the company revealed real versus inflated costs, highlighting the deception.
SEC’s Case and Future Developments
The SEC’s lawsuit claims Ward and McNutt defrauded 64 investors out of approximately $5.6 million between November 2021 and December 2022. The agency also alleges Geosyn failed to purchase 400 out of the 1,400 rigs it had promised and neglected to activate most of the rigs it did buy.
In response, Ward has refuted allegations that the company sold unregistered securities. Additionally, he previously reported McNutt for embezzlement but failed to disclose his own financial misdeeds.
Both Ward and McNutt have urged the court to delay the SEC’s proceedings, citing the criminal case and potential shifts in regulatory enforcement under the Trump administration. Trump has signaled plans to ease regulatory actions against the crypto industry, which could impact the SEC’s approach to enforcement.
